Monday, January 17, 2011

Self Managed Super - no compensation safety net

The well documented case of Trio Capital (Astarra Funds Management) in Sydney papers brings home another interesting issue - as highlighted in an excellent article today by Stuart Washington in the Sydney Morning Herald.

Self Managed Super Funds (SMSF) - a desirable avenue for retirement funds for Aussies (cost effective and giving more flexibility) and a rapidly increasing sector representing at least 1/3 of Australian superannuation monies - are not currently included in the government's compensation scheme.

The government compensation scheme allows for compensation to be paid to investors in a registered super fund in the case if fraud.  SMSF are not registered super funds and thus are excluded.

What this means then is that for those investors who have a SMSF, under the current rules, they will not receive anything if the fund manager steals their money (as is the case in Trio).  How is this fair?

Retail or wholesale super funds and SMSF function is the same - to provide retirement funds to individuals.  Let's hope the government reviews this regulation and makes changes to include those affected by the Trio debacle. 

Read Stuart's article here

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