Today more and more Australians are choosing to manage their own superannuation through Self Managed Super Funds (SMSF).

An SMSF provides benefits for retirees in the same way as a third party managed Super Fund. While SMSFs are free from some regulations placed on standard Super Funds, it’s important to understand there are additional SMSF rules and restrictions that must be followed.

An SMSF has characteristics including, but not limited to:

  • 1 to 6 members only.
  • A Trustee of an SMSF can be either an individual or a Corporate Trustee.
  • Each member of the Fund is a Trustee or is a director of the Corporate Trustee.
  • No member of the SMSF can be an employee of another member, unless the members are related.
  • Trustees must not receive any remuneration from the Fund.

 

Trustee eligibility:

Generally, persons over 18 years can be a Trustee provided they are not under a legal disability or considered a disqualified person.

Examples of where an SMSF may be appropriate include:

  • A business owner looking to include commercial property in their Super.
  • A retiree who is looking to take a more active role controlling their retirement income.
  • An individual wanting greater participation in their Super.
  • A family group (maximum 4 members) looking to pool their Super Funds.

 

Self Managed Super Funds Pros & Cons

The pros and Cons of an SMSF include, but are not limited to:

Pros

Cons

You have more control over how and where your money is invested

You are responsible for making sure your Fund complies with regulations

Potential fee savings

You have to administer the Fund

(or pay a company to do so)

SMSFs offer the potential to use tax savings strategies not possible in other types of Funds

Penalties for non-compliance range from financial penalties to imprisonment

SMSFs can purchase your business’ real property

 

You are required to prepare, implement and regularly review the Fund’s investment strategy, insurance requirements etc.

 

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