A self managed super fund (SMSF) is an alternative superannuation option to industry and retail funds. The key difference is that an SMSF allows you to completely manage your fund in comparison to having a fund manager control your superannuation. If you seek to establish a SMSF, you must do so using a trust deed. A maximum of four members can be included in your self managed super fund, all of which must act as trustees. These funds are regulated by the Australian Taxation Office, who provide guidance and support to assist you in complying with the relevant superannuation laws and regulations.
Opting for a self managed super fund over a mainstream option would provide you with a number of unique benefits. Listed below are five of the key advantages associated with having a SMSF.
1. Direct Control
A self managed super fund allows you as a member to completely control the overall investment strategy. This essentially means you can choose exactly where you want to invest your money, rather than leaving that responsibility to a fund manager. This allows you to own the performance of your investments and not be reliant on the ability of a professional.
2. Flexible Investment Options
A SMSF would afford you the flexibility to access a large range of investment options, free from the restrictions of most mainstream super funds. Such strategies may not be available to members of a retail or industry super fund, who can be limited to the investment streams specified by the fund company.
3. Save on Fees
Self managed super funds can often compete with the large and expensive retail funds on fees. This is especially the case if members of your SMSF complete a lot of the administrative and investment related work themselves. Often self managed super funds with substantial balances experience the greatest relief with regards to fees.
4. Consolidation
As a self managed super fund allows for up to four members, the potential to combine each individual’s super assets can be of benefit. This would instantly increase the size of your fund’s balance, which would provide for greater investment opportunities. There would also only be one set of fees, which can be diversified amongst all members to lower your personal cost.
5. Transfer Personal Assets into your SMSF
The standard contribution made into a self managed super fund would typically be in the form of cash. However a SMSF allows you to contribute assets other than cash to your fund. This is commonly referred to as an “in specie contribution”. There are regulatory guidelines in place that outline what contributions can be accepted and who is allowed to make them.
Typically users of self managed super funds tend to be those who own a business or are self-employed and possess a base knowledge in finance. However, in a climate in which awareness regarding super is growing, a SMSF can definitely be a viable option for all.
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