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SMSF retirees high preference for cash

Discussion in 'Superannuation, SMSF & Personal Insurance' started by davewa, 31st Mar, 2012.

  1. davewa

    davewa Active Member

    22nd May, 2011
    Sydney, NSW
    Hi folks,

    I recently found this interesting article Eliminating the great superannuation rip off | Bill Mitchell – billy blog about SMSF.
    Contains lots of stuff but something a little alarming in it states "the Commissioner of Taxation (the regulator of SMSFs) came out a few years ago and said that he was concerned that SMSF maybe non-complying because they did not have a properly structured investment strategy (as required by law) because of their high preference to cash. This violates the rule that clients should only invest in assets that suit their risk profile. I have seen SMSFs 100% in cash..."

    Does anyone know if the ATO currently views things this way?

    After all I suppose a term deposit by an SMSF in a decent bank is about as secure as it gets, and for many retirees security is their main concern. Indeed the pension cash rates in many (non-SMSF) funds is significantly lower than those that any SMSF trustee can find from the banks - and backed up by the Australian Government Guarantee to $250,000 (unlike non-SMSF funds). Possibly the non-SMSF cash option is a case of lower return and higher risk. No wonder that many SMSF trustees in pension mode like the cash option - that may be the reason some are doing SMSF in the first place.

    What do others think?

    Of course the usual disclaimer that nothing in this article should be regarded as advice, nor am I a finance professional.