SuperEasy Articles
The Role an Actuary plays in a SMSF

The conduct of a Self Managed Superannuation Fund (SMSF) requires the input from a number of professionals including;

  • The Financial Planner or Accountant to place the SMSF in the overall savings, investment, business and taxation strategy of the individual.
  • The Financial Planner or Accountant to advise on the most appropriate investment strategy and investment selection of the assets of the superannuation fund.
  • The Lawyer to ensure that the constitution of the fund by its Trust Deed is not restricting of the flexibility that such funds can provide.
  • The Accountant to ensure that proper accounts are maintained, that tax returns are correct and that appropriate independent Auditing is performed annually on the fund.
  • The Fund Administrator, Financial Planner or Accountant to ensure that proper and accurate records are maintained of the benefit liabilities and member account balances and that the requirements of the SIS Act and Regulations are complied with.
  • With so many possible advisers, why do you need an Actuary also?

The Actuary does not really enter the scene until the retirement phase of life is reached and one or more pensions are about to or are being already drawn. The Actuary can work with the Lawyer to ensure that the necessary flexibility of Trust Deed wording is present to keep subsequent actuarial work to a minimum and thereby keep costs down. That is preferably done when the SMSF is set up but it may not be too late to do it just prior to starting on a pension.

An experienced SMSF Actuary can be of considerable assistance in helping to negotiate reasonable benefit limit (RBL) issues, in selecting the right combination of allocated and complying pensions, in selecting the right combination of initial complying pension level and the subsequent rates of increase in order to meet RBL or Centrelink requirements.

The statutory responsibilities of the Actuary include certifying for the Tax Office (at least three-yearly) the amount of income from assets or the amount of assets supporting pensions in the course of payment. That income is then entitled to be exempt from income tax within the superannuation fund. That applies to all types of pension including both allocated and complying pensions.

In addition, the Actuary has statutory responsibilities in relation to complying pensions which include conducting an annual investigation of the assets and liability position of the SMSF to ensure that the assets are capable of meeting the pension liabilities and certifying that to a high degree of probability. The Actuary's Certificates here meet the requirements of both the SIS Act and Centrelink for Age Pension purposes. The Actuary is able to provide quotations, advice and solutions to deal with unexpected circumstances that may arise in these areas.

When a primary or reversionary pensioner dies, the Actuary is most helpful in guiding the Trustees as to what level of reversionary pension or pensions are able to be supported by the remaining assets of the SMSF, having regard to the eligible beneficiaries, their ages and the requirements of the SIS Act.

Although not the primary concern of the Actuary, an appropriately licensed Actuary is able also to advise and comment on the suitability of the investments of the SMSF from time to time with particular regard to their performance and suitability to the requirements of the pension obligations undertaken by the SMSF.

The Actuary is an indispensable advisor to a SMSF so you had better get to know a helpful and experienced one as soon as you look like going into the pension mode.

For further information and assistance with your retirement needs, please contact Mr Dance on (03) 9710 1242.

First Published: 12 August 2004 - Copyright © SuperEasy Pty Ltd

This article is intended to be a factual analysis of past investment returns. It is not intended, nor is it to be regarded, as investment/securities advice. It does not take into account whether any particular investment or type of investment is suitable for your individual circumstances. It is strongly recommended that you seek professional advice before making any investment choice or decision.

SuperEasy Pty Ltd is not licensed to provide advice on investments, or legalities of the types of investments that you can have. We strongly recommend that you seek professional advice from an AFSL holder before making any investment choice or decision.