A rollover is a transfer of super savings from one fund to another.
Your existing super will be either
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.
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.
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 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,
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.
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.
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)|
Check the details:||
Check the details:|
Request the rollover||
Make the payment:|
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.
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.
An important change is that SMSF administrators can now use SuperStream to initiate rollovers on behalf of their SMSF clients.
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
Each member must have
All of these items are requirements for the original setup of an SMSF, so they should be readily available.
Trustees (or their nominated representatives – e.g., tax agents or SMSF administrators) must know how to access information on various government systems.
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.
The SMSF verify service verifies SMSF details.
This system validates APRA member details.
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 is a secure way to access government services online in one place. You can use it for rollovers.
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.
Although it is possible to do rollovers via MyGov, SMSF trustees may want to seek two types of advice:
Switching funds can significantly impact future retirement benefits.
Some of the issues to be considered include
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.
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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