Are you thinking of managing your own super fund? Outside the financial sense, it can be rewarding to manage your superannuation, in which the most important aspect is you are in control. You can make all the decisions meaning the fund can directly address your specific needs.
Self-managed super fund (SMSF)
A self-managed super fund, or SMSF, is a superannuation trust structure which provides benefits to its members in their retirement. The main difference of SMSFs from other super funds is that SMSF members are also the trustees of the fund.
An SMSF can have up to four members and one of its advantages is the level of control the trustees have in customising the fund to meet their personal needs. The trustees are the ones responsible for making decisions on the fund and comply with relevant laws.
Take note that annual running expenses can be high and it’s more cost-effective if you have a large balance as set up costs. SMSF is regulated by the Australian Taxation Office (ATO).
SMSF – How does it work?
SMSFs operate under the same rules and restrictions as ordinary super funds. They have their own tax file number (TFN), Australian Business Number (ABN), and transactional bank account which allows them to:
- Make investments, where all SMSF investments are made in the name of the fund and are controlled by the trustees.
- Receive contributions and rollovers.
- Pay out lump sums and pensions.
SMSF advice can help you think about the pros and cons of running an SMSF, and help you decide whether it’s the right option for you. SMSF advice may also help with the administration and making investment decisions for your SMSF. You should understand how this works because you cannot pass on the responsibility of being a trustee or director.
Remember, if you decide to set up an SMSF, you are the one who is liable for all the decisions made by the fund even if other members make decisions or you get advice from a professional.
Managing your SMSF
When managing your SMSF, you should:
- Make time to manage an SMSF. Make sure that you can focus on managing your fund. Most of those who set up an SMSF regretted it because it costs so much and it involves more effort than many anticipate.
- Learn the costs of managing an SMSF. There are costs associated with running and reporting on your SMSF and how you invest the money in the fund. Some of these costs may include: audit fees, valuation of SMSF asset fees, reporting fees, broker and financial advice fees, and insurance and legal fees.
- Be skillful in managing an SMSF. You are personally responsible for your investment decisions. Choosing what to invest in is one of the hardest parts of running an SMSF. Making these decisions requires expertise and knowledge on how to manage investment risk. For example, cash investments and term deposits may not be able to keep up with inflation. It is one of the risks involved with investing heavily in cash and fixed income asset classes.
If you are not sure about managing your SMSF, the ASIC can help you decide whether it is right for you. They provide guidelines on how to work out your goals, decide how much risk is applicable to you, learn more about the investment, consider tax implications, etc.
Use the ASAG Reverse Mortgage to supplement your super
Our team at ASAG supports our Australian customers who are about to enter retirement or already in retirement by offering our equity release solutions to help boost their standard of living. One in particular is our reverse mortgage.
One of many uses of the ASAG Reverse Mortgage is to improve your retirement income stream by allowing you to access the wealth in your home without ongoing payments and selling your property. The reverse mortgage is paid off when you permanently leave your home, either you downsize, move to aged care, or pass away. The funds can be used for any objective you see fit, which may include as a super supplement or a part of your Retirement Planning.
We’re happy to assist you with more details about how the loan works. Our lines are open on 1300 002 724 and at email@example.com, so feel free to contact us or send your enquiries about our equity release solutions.
You can also get started by using our tool below to assess your available equity.