Self managed super funds

As the name suggests, a self managed super fund is a superannuation fund run by you.

Sometimes referred to as SMSFs, the basic requirements are that it must have fewer than 5 members and that these members are family or business related. All members need to be trustees (guardians of the money) and even if the fund is only for one person, you still require 2 trustees, although a corporate trustee with only one director can be used.

Self managed superannuation funds give members unique control of their retirement investments, which can mean greater comfort with superannuation as a retirement vehicle.

Even though self managed super funds are becoming increasingly popular, they are generally suited to experienced investors who fall into the following categories:

  • Investors capable of, and interested, in managing their own assets
  • Executives and professionals who wish to take advantage of super choice offered by their employer or business structure
  • Retirees who want to pay themselves a pension from a low tax environment
  • Family groups who want to take advantage of estate planning initiatives available via the SMSF structure
  • Business owners who may own or are thinking of purchasing their premises.

Self managed superannuation funds are also more cost effective for investors with a superannuation balance greater than $200k.

Regulation and administration

If you are thinking of setting up your own self managed super fund, they are closely regulated by law and there are guidelines to ensure that fund investments are made with a view to providing for the members’ retirement.

Administration requirements include organising tax returns for the fund, as well as audits, taking minutes of trustee meetings and the development of an appropriate investment strategy. These should be done with professional assistance, as there can be severe consequences for non-compliance, including loss of tax deductions on contributions and potential heavy tax penalties on the fund assets.

If you’re thinking about setting up your own self managed superannuation fund, we can help simplify the process. Talk to one of our financial advisers.