Navigator today joined industry experts in warning of potential pitfalls in the A$180 billion self managed superannuation fund (SMSF) market, but said most of them were preventable.
Navigator today joined industry experts in warning of potential pitfalls in the A$180 billion self managed superannuation fund (SMSF) market, but said most of them were preventable.
Navigator's group director products, marketing and public affairs, Rob Donaghy, said the current industry and media debate on SMSF issues centred on the ability of investors to comply with complex and onerous superannuation legislation.
"I agree that it is easy for some investors to get it wrong. SMSFs are often called 'do it yourself funds' but for those without the DIY skills, it is easy to make mistakes. If this happens, the penalties can be very harsh."
"Anecdotally there are still many who see a SMSF as a tax effective vehicle for investments not related to providing benefits in retirement, such as golf club memberships, art to decorate their house, and holiday homes for their personal use."
"There are significant legal obligations in electing to be a SMSF trustee and not recognising and upholding them can also create pitfalls," he says.
Rob said there were solutions at hand to help prevent these pitfalls. "Navigator has teamed up with specialist partners to provide assistance to financial advisers and their clients on the issues associated with setting up and managing a SMSF," he says. These partnerships include:
- Tribeca for SMSF training to help meet the demands to comply with the law;
- PKF for accounting and taxation advice plus annual independent auditing;
- links to the BGL superannuation software "Simple Fund" to manage and reduce the ongoing SMSF burden; and
- Espreon for SMSF trust deed establishment.
"At Navigator we understand an 'off the shelf' SMSF solution won't suit all our investors, so we have recently launched a new breed of SMSF solution which makes it easier to establish and manage super funds, for both financial advisers and their clients."
Navigator's SMSF solution is based on building blocks which can be used to design a service for the individual investor and help to avoid the pitfalls.
Rob says that while SMSFs may be one of the fastest growing markets in superannuation, it is critical to get the right advice before deciding if it is the best retirement strategy. "Given the regulatory issues associated with running a superannuation fund, professional advice is critical."
The SMSF market in Australia has grown from A$141 billion at 30 September 2004 to a staggering A$180 billion at 30 September 2005[1], as many investors decide to take control of their retirement future.
Now accounting for nearly a quarter of all the superannuation assets in Australia[2], the growth in SMSF can be attributed to a relatively new breed of "savvy" investors and has been helped by the introduction of choice of fund.
Rob says SMSFs are obviously not suitable for all investors. "If you decide a SMSF is not for you, the good news is that Navigator's Personal Retirement Plan can provide you with many of the benefits of a SMSF. This includes direct share investments, and our online technology allows your financial adviser to manage your assets in a very tax-effective manner."
For more information on a Navigator SMSF please contact your financial adviser.
-ends-
[1] APRA Statistics, Quarterly Superannuation Performance September 2005
[2] APRA Statistics, Quarterly Superannuation Performance September 2005
For further information please contact:
Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892
Mobile: 0407 966 632
Notes to editors:
- Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners is the Australian funds management arm of Aviva plc. These companies provide wealth creation and wealth protection products and services for more than 300,000 customers throughout Australia.
- Globally, Aviva Australia is part of Aviva plc, the world's sixth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has A$77.6 billion premium income and investment sales from continuing operations and more than A$683.9 billion of assets under management (as at 9 January 2006). The group has approximately 60,000 employees and 30 million customers worldwide.
- The information in this document reflects Navigator Australia Limited's ('Navigator') ABN 45 006 302 987 understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. A PDS is available from NULIS or your financial adviser. Applications to invest in investment product(s) through the investor directed portfolio service ("IDPS"), operated by Navigator, must be made by completing the application form attached to the applicable IDPS Guide Offer Document and Investment Allocation Authority. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances. Aviva does not receive any remuneration in relation to the provision of information available from this media release which is of a general nature only.