Self-managed superannuation funds
Self-managed superannuation funds (SMSFs) are a popular option for investors seeking greater control over their retirement savings. However, the decision to establish an SMSF should not be taken lightly. Whether an SMSF is suitable for you will depend on your needs and circumstances and whether you are willing to take on the responsibility of running your own super fund.
What are SMSFs?
SMSFs are superannuation funds which are established and operated by the members of the fund. Under the superannuation rules, the members of an SMSF are generally required to act as a trustee of the fund or as a director of the fund's corporate trustee, and are legally responsible for managing the fund in accordance with a strict set of legal requirements.
Structure of an SMSF
An SMSF is composed of a number of key elements. These include:
· the trust deed which is a legal document that sets out the rules of the fund
· the trustee who is legally responsible for managing and administering the fund in accordance with the trust deed and the superannuation laws
· the members (max of 4 (1) ) who are also required to act as trustees and have benefits in the fund
· the investment strategy which specifies the fund's investment objective, how the trustees should invest the fund's assets and whether it will hold insurances for members
ATO SMSF Publications
The ATO has produced a number of educational videos and guides in relation to the different aspects and obligations of running an SMSF. These videos and guides are available on the Super Funds page of the ATO website at www.ato.gov.au:
· Setting up a self-managed superannuation fund
· Running a self-managed superannuation fund
· How your self-managed superannuation fund is regulated.
There are a number of professional SMSF service providers that can assist you to set up and run your fund. These include: · an accountant that provides SMSF administration services · a specialist SMSF administration service · a financial adviser to help formulate and investment strategy and manage the fund's investments · a solicitor to assist with any trust deed / estate planning requirements.
(1) In the 2018 Federal Budget, the Government proposed increasing the maximum number of members in an SMSF to 6. At the time of writing, this proposal has not been legislated.