How can Self Managed Super Funds work for me?
Most people have their super with a fund that is managed by a third party – a fund manager, a large corporation or an industry body. However, a growing number of Australians have decided to manage their own super which is known as a Self Managed Super Fund (SMSF).
What are the benefits of a Self Managed Super Fund?
Investment flexibility and control – a larger range of investment options are available than what a retail or industry fund can offer. For example direct property, physical commodities and even business premises.
Capacity to pool super with up to 5 other individuals. Most SMSF’s have two members, usually in the form of a couple, however up to 6 members are allowed.
Estate planning – allowing for greater flexibility in how death benefit payments are made.
Effective tax management – such as capital gains tax
How do I know if a Self Managed Super Fund is right for me?
SMSF’s are however not suitable for everyone. There are also risks involved with commencing and operating a SMSF, as well as costs and responsibilities not encountered by other super fund members. It can take time and skill to run a SMSF. There are penalties for non-compliance, no access to a complaints mechanism, insurance availability may be more limited or expensive for members and an exit strategy is much more complicated.
Setting up an SMSF requires setting up a trust, having a trust deed, an investment strategy, a tax file number and a bank account in the SMSF’s name. It is also crucial that a SMSF does not provide any personal advantage to members and is operating for the sole purpose of retirement.
SMSF’s are quite a complicated area of advice with many elements to consider. At JKLM Wealth Group we have helped many clients both setup and manage an SMSF, often working hand in hand with other professionals such solicitors and accountants to ensure you are getting the best outcome possible.