News / Feb 14, 2022

The Six Things to Know When You Rollover Your Super to an SMSF

Mark Phillips
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A rollover is a transfer of super savings from one fund to another. 

Your existing super will be either

  • A fund regulated by the Australian Prudential Regulation Authority (APRA) – generally a public fund, a retail super fund, or an industry super fund, or
  • A self-managed super fund regulated by the Australian Taxation Office (ATO)

Funds can accept contributions from various sources, including employer contributions, salary sacrifice, contributions from personal funds, or after-tax contributions. 

This is your money, but there are multiple regulations and hurdles to be aware of when considering rolling over savings. Here are six of them.

#1: Reasons to Change Your Super Fund

You might want to transfer your savings between APRA-regulated funds, between APRA funds and your SMSF, or from one SMSF to another.

Here are some factors that might encourage you to make the change. 

Super Fund Performance

You might want to switch because of your fund’s performance record, fees, insurance cover, and services provided. 

Both the Productivity Commission and APRA have recently expressed concerns about the high fees being paid by members of super funds and the underperformance of many of them.  At the end of 2021, thirteen funds “failed” the APRA annual test on performance, leading to more than a million members being advised to switch funds.

The requirement for funds to act in the best interests of their members has been changed to acting in the best financial interests of members.

You can compare funds using the ATO’s YourSuper comparison tool and APRA’s recent “heatmap” of fund performance.

Consolidating Multiple Accounts

You may want to consolidate several accounts if you changed jobs without closing or rolling over your funds. 

In 2019, the Productivity Commission found a third of all super accounts were not needed because the persons already had primary accounts. Having multiple accounts meant that members were paying $690 million in excess administration fees and $1.9 billion in extra insurance premiums per year, seriously eroding their savings.

In an attempt to deal with this problem, and as part of the Your Future, Your Super reforms that came into effect on 1 July 2021, 

  • Employees can use a standard choice form to select and inform employers of their choice of fund
  • If an employee does not communicate an alternative, employers must first check with the ATO whether a new employee has a stapled super fund – a fund that is linked to an individual and follows them as they change jobs

Combining Member Contributions

Many Australians have opted for self-managed super funds to manage and better control their superannuation benefits. 

This includes combining the savings of up to six members by rolling them over from existing super funds and consolidating them into a single SMSF.

However, they too should be monitoring performance and investment returns. It’s generally best to seek professional advice before switching funds or considering member transfers.

#2: How To Rollover Super To SMSF

The ATO spells out the rollover process. There are different steps depending on whether this is a rollover to SMSF or a rollover out of your SMSF – for example, if you want to transfer from one SMSF to another.   

There is also a lot of jargon to understand!

Here is a summary of the steps provided by the ATO.

Step Rollover of member benefits into your SMSF
(Rollover other super to SMSF)
Rollover of member benefits out of your SMSF
(Rollover SMSF to other super)
1 Engage an SMSF messaging provider offering SuperStream rollover services and obtain their electronic service address (ESA) Engage an SMSF messaging provider offering SuperStream rollover services and obtain their electronic service address (ESA)
2 Check:
  1. Your SMSF has an Australian business number (ABN)
  2. Your SMSF’s unique bank account for superannuation payments is registered with the ATO
  3. Details for your SMSF and the member are recorded with the ATO and are up to date
  4. Super Fund Lookup to ensure your fund is a “complying” or “registered” fund
  1. Your SMSF has an Australian business number (ABN)
  1. The member’s tax file number (TFN) using the SMSFmemberTICK system
  2. When rolling to another SMSF, use the Fund Validation Service to verify member details
  3. When rolling to an APRA-regulated fund, use the Fund Validation Service to obtain the receiving fund’s details
3 Check the details:
  1. The details you provide to your transferring fund exactly match those held by the ATO
  2. The details of the transferring and receiving funds match
Check the details:
  1. The details you provide to your transferring fund exactly match those held by the ATO
4 Request the rollover
  1. Confirm with the FROM fund they have all the required documentation to verify your identity and the payment destination
  2. Request the rollover via MyGov or a paper version directly to the fund
Make the payment:
  1. Ensure you have sufficient liquid assets to pay the rollover
  2. Check your transfer limit with your financial institution to ensure you can make the rollover payment
  3. Send the electronic rollover message via SuperStream, no later than three business days after receiving all the information required to process the request
  4. Make a single rollover payment to the receiving fund simultaneously with the SuperStream message
  5. Ensure the payment reference number on your rollover payment matches exactly with that on your SuperStream message

Most of these steps verify information about the fund and the member whose super balance is being transferred.

Different funds may have additional requirements and rules before releasing rollover funds. This can cause significant hold-ups in processing requests.

SMSF trustees are advised to contact the other fund to confirm their required documentation right at the start, rather than waiting until Step 4, as envisaged in the ATO checklist above.  

If all the details are correct, the actual transfer can occur via the SuperStream electronic transfer system.  

#3: Understanding the New Requirements for SuperStream

From October 2021, SMSFs must use the SuperStream electronic transfer system for rollovers. 

The previous manual system involved funds doing rollovers by cheque or EFT, together with a rollover benefits statement (RBS) to the receiving fund. Often these transactions had insufficient detail to allocate the funds correctly to members. The SuperStream system provides information in a standardised format.

SuperStream rollovers should reduce costs and time. 

  • The turnaround time is three days from when the transferring fund has all the information it needs.
  • Where assets must be liquified to make the payment, the fund has 30 days to complete the transaction, provided there is written consent from all parties.

An important change is that SMSF administrators can now use SuperStream to initiate rollovers on behalf of their SMSF clients.

rollover super to smsf

#4: Information Required for Rollover Applications

Most of the steps in the checklist provided by the ATO are verification or validation steps to ensure that the information is correct and that both the fund/s and the members are entitled to receive funds.

To this end, SMSFs must ensure that they have

  • An Australian Business Number (ABN) – SuperStream uses this as the fund identifier
  • An Electronic Service Address (ESA) to process the contribution data. The ESA will also be used for release authorities in the future (e.g., for excess concessional contributions)
  • A unique SMSF bank account
  • Member and trustee details

Each member must have

  • A tax file number (TFN)
  • Personal information registered with ATO
  • A Director ID number (IDN) for corporate trustee structures

All of these items are requirements for the original setup of an SMSF, so they should be readily available.

#5: Understanding the ATO Systems

Trustees (or their nominated representatives – e.g., tax agents or SMSF administrators) must know how to access information on various government systems.

SMSFmemberTICK service

The Self Managed Super Fund Member TFN Integrity Check Service matches member details to information held by the ATO.

Any fund rolling over part or the whole balance of a member’s account must have ATO validation of the member’s information (Regulation 6.33D).

Trustees should update member information regularly rather than waiting for a rollover request. Having a professional administrator or Tax Agent to do this can be very helpful.

Self Managed Super Funds Verify (SMSFVRFY):

The SMSF verify service verifies SMSF details.

SuperTICK (STIC):  

This system validates APRA member details.

Super Fund Lookup (SFLU)

SFLU is a public register that confirms whether an SMSF and its members comply with legal requirements and are eligible to receive contributions or rollovers.

Rollovers will not be permitted until an SMSF has the status of “registered” and “complying”. It can take up to 56 days for newly registered SMSFs to achieve this. 

For more information on the status descriptions and their meaning, please read our article Recent Changes to SFLU Means Speedier Fund Rollovers.

MyGov Account

MyGov is a secure way to access government services online in one place. You can use it for rollovers.

  • Login to the MyGov site and go to Your linked services
  • Open the ATO page, select Super, and Transfer super
  • A list of all your funds and balances (as of 30 June of the last financial year) will appear. This includes funds that the ATO may hold if they have been “lost” in the past when funds closed or you did not update your details
  • Select the accounts you’d like to transfer from and the account you’d like to transfer to (e.g., to your SMSF)

Rolling the whole superannuation balance over to the self-managed super fund will close the other account and also cancel the insurance held in that account. 

#6: When to Seek Professional Advice

Although it is possible to do rollovers via MyGov, SMSF trustees may want to seek two types of advice: 

  • Personal financial advice regarding fund investments and the impact of possible rollovers, depending on their financial situation. 
  • Administration and tax services, including acting as a tax agent or nominated representative 

Personal Financial Advice

Switching funds can significantly impact future retirement benefits. 

Some of the issues to be considered include 

  • Changes in fees payable: Any increase in fees can significantly impact the final retirement balance. Even 1% on a $200,000 balance means $2,000 per year. Moving from a percentage-based structure to a fixed cost is one of the reasons for switching to an SMSF.
  • Loss of insurance benefits: If you lose the cover of your current fund, you may have to pass a medical examination, have restrictions, pay higher premiums in the new fund, or even be unable to obtain insurance at all.
  • Tax deduction claims: If you want to claim a tax deduction for personal contributions to your fund, you must do this before you transfer your super.

Administrative and Tax Services

Much of the process of rollovers is administrative. Whether you are an individual SMSF trustee or an accountant or financial adviser for multiple SMSFs, having all the administrative, financial, and tax  details under control is a major plus. 

SMSF Engine offers a full administrative and tax service and can facilitate effective and efficient rollovers. We can also use SuperStream to initiate rollovers on your behalf.

To find out how we can help you, please contact Mark Phillips or Alex Polorotoff.

Key takeaways – Rolling Over Superannuation Benefits

SMSF members have different reasons for rolling over superannuation benefits. 

Some simply want to move their savings from a current retail or industry fund to an SMSF. Others are consolidating savings from several super funds. Yet others want to wind up their SMSF and move their retirement savings to another SMSF or an APRA-regulated industry or retail fund.

There are regulations and efficiencies related to rollover decisions.  SMSF trustees may be best served by taking professional advice about rollover super to SMSF or from their SMSF to other supers. 

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