Everybody needs to invest in superannuation. Our system of compulsory super is in many respects the envy of the world and forms the cornerstone of our national strategy to fund our ageing population beyond retirement age.

One of the frustrations for many people though is that the performance of some retail and industry super funds does not meet their expectations. That has caused many to look to alternatives and particularly to opening their own self managed super fund (SMSF).

An SMSF is a legal structure, regulated by the ATO, set up with the sole purpose of providing for your retirement.

Having an self managed super fund will typically give you more control and flexibility over your super and retirement planning because you will decide how your fund is invested.

Over the past 15 years or so, the growth in SMSF’s has been explosive. Over this period, the number of SMSF’s has increased from about 187,000 to more than 500,000 funds, controlling more than $500 billion in assets, nearly one third of all assets in the super system.

Key features of a self managed super fund

  • There must be no more than 4 members
  • All the members must be trustees or, if the fund has a corporate trustee, all the members must be a director of the corporate trustee
  • The money in the fund can only be used to provide for your retirement

Setting up a self managed super fund

  • First of all, you’ll need enough money in the self managed super fund (SMSF) to make the set up and annual running costs worthwhile. The exact amount of money needed within an SMSF to make it viable is a topic of some contention and will depend on factors like how involved you wish to be in making decisions and also what your future contribution strategy looks like (if you plan to rapidly inject contributions, a lower balance in the early days of the fund can be viable).
  • You’ll need to budget for ongoing costs including accounting, tax, audit and legal fees, as well as the costs of financial advice if you choose to take professional advice on your investment strategy. These costs will eat into your investment returns so you need to ensure that your fund is generating sufficient income both to cover the costs and to build up your fund long-term.
  • You’ll need the financial skills – or access to others with the financial skills - to be confident that you’re making the right investment decisions. You’ll need to create an investment strategy that will generate sufficient returns to provide for you in your retirement

SMSF’s aren’t for everyone. They can be time consuming and expensive to maintain. On the other hand, they offer a degree of freedom and control, together with the prospect of more personalised returns which align with your own life goals, simply not available to other super fund types.

If you’re interested in taking the leap, H&R Block SMSF Solutions can help you set up and administer your fund. Read more information about our SMSF solutions or call 1300 611 320.

July 2016

 

Important information

This content has been prepared by H&R Block Ltd ("H&R Block"), ABN 89064268 800.The information is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice. Although every effort has been made to verify the accuracy of the information contained above, H&R Block, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained on this website or any loss or damage suffered by any person directly or indirectly through relying on this information. H&R Block Ltd ABN 89 064 268 800 is a Corporate Authorised Representative No. 001246230 of Accountable Financial Solutions Pty Ltd ABN 36 146 520 390 AFSL No. 409424.

Talk to an H&R Block SMSF expert today

H&R Block is the expert on the full range of SMSF services including establishing a new self managed super fund, buying property with an SMSF and meeting annual compliance and tax obligations.

Find out more

Talk to an H&R Block SMSF expert today

H&R Block is the expert on the full range of SMSF services including establishing a new self managed super fund, buying property with an SMSF and meeting annual compliance and tax obligations.

Find out more