One big name in the actuarial certificate space has weighed in on the government's proposal to change the requirements to obtain an actuarial certificate.
Treasury confirmed earlier this month it would begin consulting on changes to requirements for obtaining actuarial certificates which involved the removal of the requirement to obtain actuarial sign-off for a significant amount of account-based funds.
Speaking to SMSF Adviser, managing director at NetActuary, Brian Bendzulla, said while there is a strong case for keeping the requirement so that it remains an independent calculation of what is quite a substantial calculation in the tax return, “the political imperative is to open it up”.
“From a freedom point of view, removing the requirement has quite a lot of cutting red tape advantages at the political level, and certainly large institutions are more than capable of doing it themselves,” said Mr Bendzulla.
Mr Bendzulla said the efforts of lobbying on the issue will “dictate which view dominates”.
“As you’ve probably seen from the draft legislation, the visualisation is that it won’t be a statutory job anymore,” he said.
Mr Bendzulla said he can foresee this area of SMSF compliance following a similar route to comparable areas of family law.
“Take for example the calculation of the value to place on defined benefit arrangements for family law, actuaries are heavily involved in that, but you’ll find forensic accountants, specialist firms, actuaries all doing that computational work. I would think this will probably go the same way.”
So far there has been significant backlash to the proposal, including from industry heavyweights such as PwC, who are concerned about the idea of removing professional oversight at a time when a raft of superannuation changes are being introduced.
PwC director of private clients Liz Westover recently told SMSF Adviser she does not support this intention by Treasury, stating that actuarial certificates add to the integrity of the SMSF sector.
“Given the changes that are coming through, the fact that larger fund balances won’t be able to segregate assets [means] that you’re now going to have more SMSFs with a blend of pension and accumulation accounts, I would have thought that the need for actuarial certificates was greater than it ever has been,” Ms Westover said.
“I think they have a very strong place as an independent source given that ECPI or exempt current pension income is the single largest deduction for SMSFs.”
Voices from within the actuarial certificate industry have also told SMSF Adviser it seems unnecessary to remove professional oversight when cost and time barriers to obtaining an actuarial certificate are not significant for SMSF trustees.
“Now, the average price per certificate is south of $150, certificates are delivered in hours, most clients request and obtain their certificate via the SMSF administration software but the professional, actuarial oversight remains. This is the sign of an efficient and effectively operating market,” said Act2 Solutions director, Andy O’Meagher.
Mr O’Meagher also strongly believes the provision of actuarial certificates should not be viewed as a calculation alone, referencing a recent auditor opinion published in SMSF Adviser.
“As indicated in this article, over-reliance on data feeds and cutting edge software is a trap that can lead to errors through assumption of ‘accuracy through technology’,” he said.
“The recently enacted changes to the superannuation system will significantly increase the level of complexity in SMSFs, of this there can be no doubt.
“Surely when you make changes that significantly complicate the regulatory structure of an industry, this should lead to an increase in the compliance requirements to assist and guide the industry through the changes and to help ensure the new legislation is being followed appropriately. To actually reduce the compliance within this newly ‘improved’ industry would open it up to more errors, misunderstanding and potential rorting.”
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