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Self Managed Super Funds - November 1st
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A Self-Managed Super Fund, or SMSF for short, is a do-it-yourself superannuation scheme designed for those who want direct control over their retirement savings and investments.
An SMSF is an investment portfolio you set up to save funds for retirement. It differs from a normal superannuation fund because the members, known as “trustees”, decide how the fund operates and what to invest in. The fund’s assets are controlled by the trustee, in most cases the members themselves. Members are not only responsible for the overall investment strategy, they are also responsible for the legal and statutory requirements.
In a speech given to the SMSF Professionals’ Association of Australia (SPAA), former Chair of the Super Review, Jeremy Cooper, outlined the following potential benefits of a SMSF:
Click here for more information on the potential benefits of having a SMSF.
A SMSF can have up to four members, all of whom are Trustees of the Fund. As Trustees, all members are personally liable for all the decisions made by the fund. In the government’s 2009 Super System Review, they noted that SMSF members are on average older, earn more and have larger superannuation balances than the average worker, with the average SMSF member balance being $456,000. There is good reason for that; to quote Jeremy Cooper: “On average, SMSFs with $200,000 or less had both higher proportional costs than would be charged in a public offer fund and did not perform as well as larger-sized SMSFs.”
Unlike public offer funds (industry funds or retail funds), SMSFs are regulated by the Australia Taxation Office (ATO) and there are a number of responsibilities that Trustees must abide by – with significant potential penalties for getting it wrong. The ATO has some excellent educative resources for SMSF Trustees here.
The ATO website