Self-Managed Superannuation Funds

What is a Self-Managed Superannuation Fund (SMSF)?

An SMSF is a superannuation fund which allows members to be trustees and is not managed by a large industry fund or financial institution. The greatest benefit members of SMSFs receive is almost total control of how their retirement savings within the superannuation environment are managed and invested.

Some of the most relevant benefits of having an SMSF are:

Control
SMSF trustees have the ability to decide, within certain restrictions and limits, how their retirement savings are managed. These controls include how money is invested, how money is paid (in the case of retirement phase income streams), and how costs are incurred.

Transparency
As the trustees of an SMSF are usually the members, there is complete transparency for members’ retirement savings. They can view and review, in real time, their savings in super and how it is working towards their retirement. Any costs and fees are managed by the members/trustees and they hold all the responsibility.

The ability to borrow
Recent changes to SMSF rules have allowed for certain borrowing provisions by SMSFs for the purposes of investment for members’ retirement. The greatest impact this has had is the increase to property investments, particularly from SMSFs. While property investment is the most prevalent result of borrowing within SMSFs, there are other methods of leveraging members’ superannuation savings.

Is an SMSF right for you?

There are a number of points to consider when contemplating opening (and more importantly, managing) an SMSF. These include:

Costs
One of the most important aspects of establishing and running an SMSF is the cost involved. There are both fixed costs; which are usually accounting and audit fees, and variable costs; which are generally charged as a percentage of the size of the SMSF by the respective service provider i.e. investment managers and advisers. As SMSFs grow in size, whether from additional contributions by members, investment earnings, or application of new members, the cost-effectiveness of the fund typically increases. ASIC advises a balance of $200,000 is required to achieve cost-effectiveness to members which match other superannuation funds.

Trustees’ responsibilities
Superannuation funds, including SMSFs, are regulated by APRA. Therefore, there are a multitude of rules and governing laws when it comes to the management of superannuation funds. Trustees of SMSFs, and any other APRA-approved funds, must understand these rules and regulations. Failure to do so may result in the breaching of APRA laws and financial penalties.

How we can help

Our financial planners are specialists in Self-Managed Superannuation Funds and can provide a comprehensive package to establish and manage an SMSF. Alta Financial Planning and our partners can assist in:

 

  • Establishing a corporate trustee for an SMSF
  • Applying for company registration for corporate trustees
  • Applying for TFNs and ABNs
  • Preparing SMSF trust deeds
  • Preparing and reviewing SMSF investment strategies
  • Reviewing SMSF assets
  • Applying for borrowing within SMSFs

Once an SMSF is up and running, we can provide a full ongoing service package to ensure trustees meet their responsibilities and obligations, and SMSFs are actually achieving the intended goals and objectives of its members.

If you would like to know if an SMSF is right for you, or you would like guidance and advice for an existing Self-Managed Superannuation Fund, speak to one of our SMSF specialised financial planners. This fact file can provide more insight into the benefits and risks of operating an SMSF.