The Self Managed Superannuation Fund Professionals' Association (SPAA) has warned trustees of self managed super funds (SMSFs) to check where their cash is held, to determine if the government's guarantee of cash deposits applies to them.
Many SMSFs use Cash Management Trusts (CMTs) for their cash requirements, and these accounts may not qualify for the guarantee due to operating under a unit trust arrangement, and are governed by Corporations Law.
While the CMTs themselves may not qualify for protection, the underlying deposits within the trust could actually be covered by the new initiative.
"Trustees must review their CMT account, or seek advice if they need assistance in understanding what arrangements are currently in place," SPAA chief executive Andrea Slattery said.
A number of financial institutions, such as Macquarie, have already been in contact with their clients, to keep them informed of the situation.
"A significant amount of cash in SMSFs is currently held in CMT accounts. It is good to see that the institutions... are already taking the necessary steps to ensure that up to 100 per cent of the CMT's investments are eligible for government guarantee," Slattery said.
"Situations like these serve to highlight the importance of SMSF trustee knowledge and education, which has been a hot topic at the government and regulatory level this year," she said.
Aside from this issue, SPAA confirmed its support for this recent move by the government.
