Daughter joins your Self Managed Super Fund

Question: My parents have just added me as a trustee and member to their Self Managed Super Fund. I don't really know much about what is involved in being a member but I my accountant told me that I need a Product Disclosure Statement. Mum and Dad say that I don't need one and that the Product Disclosure Statement is not up-to-date.

Answer: Your parents as trustees of the Self Managed Super Fund (Fund) have an obligation to provide you with a Product Disclosure Statement (PDS). The Corporations Act 2001 requires that you receive a Fund PDS within three months of becoming a member of the fund.

The PDS summarises the important aspects of the Fund Trust Deed and explains the provisions of the Fund. The trustee of the Fund must include in the PDS, information about the significant benefits, significant risks, significant features and costs of the superannuation product associated with each investment option, including any default strategy.

If after having read the PDS you want more comprehensive information, ask to see the Fund's Trust Deed. This explains the working of the Fund. More detail is also provided by the SIS legislation (that is the Superannuation Industry (Supervision) Act 1993 and the Superannuation Industry (Supervision) Regulations 1994).

Our superannuation lawyer Narelle Pierce states that: "A PDS is required by law and there are serious civil and criminal implications if the Fund doesn't have a current PDS or is not providing them. The Fund auditor will more than likely not sign off on your Fund returns if you don't have a current PDS."

I agree. Every auditor that I have spoken to requires an up-to-date Product Disclosure Statement. The auditors take on too many risks, as it is, to turn a blind eye to the breach or to have to try and work out if the exemption to needing a PDS applies. Your accountant is already warning you of the dangers.

For our loved Platinum Members who paid their $99 to upgrade, Narelle and I have written a definitive paper on why you need a Product Disclosure Statement here.

You need to discuss this with your parents immediately because as a new member you need to understand the provisions of the Fund and the Trust Deed. Additionally, as a trustee it is also now your responsibility to ensure that the Fund is compliant and that you are meeting your legal obligations.

Build and purchase an up-to-date fully 1 July 2007 complying Product Disclosure Statement for $66 here.

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