For around 2 decades, SMSF (Self Managed Superannuation Funds), have been the leading sector of Australian superannuation. The number of SMSF’s were less than 100,000 in 1994, which increased to more than 400,000 by June 2012, with about 850,000 trustees. Self managed superannuation funds give you a powerful way to save for your retirement.
The significant difference between commercial funds and a self managed fund is that if you are a member of a self managed super fund, you are also the trustee. You, as a member of the SMSF, run it for your own benefit and you are responsible for complying with the applicable tax and superannuation laws.
As the trustee in charge of your investment decision, your decision requires your time and skills to implement. If needed, you can choose a financial advisor or superannuation accountant to help you decide how to handle your find. An SMSF is only for the purpose of securing retirement benefits to the member or their dependants. Also known as a DIY (Do It Yourself) super funds, SMSFs offer a greater degree of control and flexibility that is unmatched by other traditional superannuation options.
Micromanagement and Control
As a self managed superannuation fund trustee, you control where your money goes. Self managed superannuation trustees have a deeper level of understanding of how their wealth is tracking because they have greater visibility. This instills more confidence in your lifestyle and investment decisions.
As a trustee, you have more options provided to you than most other super funds. You can directly access your shares, term deposits, high-yielding cash accounts, direct property, income investments, international markets, unlisted assets, collectables, and much more.
Options in Tax Strategies
All super funds benefit from concessional tax rates. During the accumulation phase, the tax on your investment income is capped at 15%. During the pension phase, you have no tax payable. As you transition into retirement, you can reduce your tax payments and grow your super savings while you consider your tax strategies. You have the opportunity to reduce your income tax for your capital gains and investment income.
Scalable and Flexible
Self managed superannuation trustees can run multiple pension and accumulation accounts. You can adjust your investment combinations as it suits you. This gives you a faster response time to changing conditions in the market or personal circumstances..
Visible and Transparent
The transparency of a self managed superannuation fund gives you the opportunity to align your personal goals with your investment decisions; it doesn’t matter whether you are passionate about ethical investment, or property investment. A self managed superannuation fund gives you the chance to better understand where your money is going, with complete transparency over your investment’s tax treatment and performance. You have greater flexibility of investment choices as well as asset selection.
Cost and Consolidation of Super Assets
As a trustee, you will need to lodge audits and annual tax return. You will also need to pay ATO fees (which are capped). The more your self managed superannuation fund grows, the more cost-efficient it becomes. The total cost of running your self managed superannuation fund depends on any related investments and costs associated with professional maintenance. The cost of maintaining a self managed superannuation fund is generally much lower than that of commercial super funds.
You are allowed to combine your assets with up to 3 other members; family or associates in an SMSF. If you consolidate your super accounts, a larger fund is immediately created, which increases the fund’s investment opportunities and assets, with one set of fees.
Protection of Your Assets
Protection is critical for your investment assets. Where litigation and bankruptcy is commonplace, your funds are protected, even if you withdraw some of your investment for living expenses. This rule is the same for commercial super funds.
For Australians looking for better value and control from their superannuation, a self managed fund is becoming more common. With over 400,000 funds in operation, the value of the assets is at approximatlely $350 billion and increasing. .
Once you understand the benefits of self management, you learn about why it is such a popular choice and effective retirement vehicle. As a trustee, you have significant responsibilities in managing your own superannuation. The potential for tax control, tax returns, wealth transfer, asset insurance, and peach of mind is a potent mixture.