What’s all the fuss about a Self-Managed Superannuation Fund (SMSF)?

by | Jan 12, 2023

Despite recently proposed changes announced by the Government, your superannuation (super) fund will most likely be the primary vehicle for achieving your retirement goals and if managed properly, it should end up being one of your largest assets – more than enough to support you as you enjoy your retirement. It is also a very attractive investment, primarily due to its high tax effectiveness, which improves your ability to accumulate wealth.

Over the last several years, self-managed super funds have risen in popularity as it offers control, a number of tax benefits and flexibility for improved wealth creation compared to standard member retail super funds and member industry super funds.

According to latest estimates, nearly 600,000 SMSFs are now in operation controlling about a third (32%) of the total $2 trillion invested via superannuation funds. Those Australians taking an active interest in their superannuation are discovering the financial benefits offered by establishing their own superannuation fund. For instance, the average balance for SMSFs exceeds $1 million (noting – an SMSF can have up to 4 members, but most common between husband & wife), which is considerably higher than most individual retail / industry super funds that members use to park their 9.5% employer contributions up to their relevant contribution caps.

Given that Australians rely on their super to fund their retirement, and many analysts believe that now a super fund balance of $1 million is not nearly enough for a ‘comfortable retirement’ – it’s no wonder that SMSFs are becoming a popular alternative to retail and industry superannuation funds.

Perhaps the main reasons why more Australians are embracing SMSFs is that it allows you to:

own SMSF benefits

Control – Decide what you want to invest in and decide when your benefits are paid – in other words, SMSFs allows you to control your wealth creation strategy in super.

Gearing – Use borrowed money in super to invest in assets such as property. Investing in property has the potential to significantly improve wealth creation and the overall fund balance by the time you transition to retirement – in other words, gives you the ability to leverage for improved wealth creation in super.

Consolidate – Aggregate and invest a family’s superannuation benefits as well as provide a pool of monies and assets to look after family members, including children and grandchildren at the time of an accident, sickness, permanent disability, death, pre-retirement and retirement.- in other words, gives you greater flexibility to create long term wealth for your family – not just your retirement.

There are, of course, many more benefits to establishing your own self-managed superannuation fund. But watch out! SMSFs are heavily regulated by the Australian Taxation Office (ATO). There are many rules and obligations that a trustee of an SMSF must be aware of and comply with or risk the wrath of the ATO. There are many responsibilities and obligations for every trustee and member that comes with significant consequences if you do not manage and administrate the fund according to legislative and compliance requirements.

Therefore, it’s prudent to get expert financial advice, professional guidance and support from trusted advisers that specialise in superannuation strategies, superannuation management and administrative compliance.

Control Your Super & Create an Enduring Wealth Creation Strategy with Chan & Naylor’s SMSF services.

Through your local Chan & Naylor office, you can get access to our specialist service centres such as our Wealth Planning and Finance teams who can assist in the delivery you a comprehensive all-in-one SMSF solution, including:

  • Superannuation Advice & Strategic Planning throughout key stages in the Superannuation life cycle: accumulation phase, transition to retirement phase, pension phase.
  • SMSF Structure: Establishment of Trust Deeds
  • SMSF Loans: Loan Structures to purchase property in Super with debt / Borrowing in Super to buy property and other assets.
  • SMSF Investment Strategy: review, implementation and performance management.
  • SMSF Administration & Compliance: including: Trust Deed Reviews, SMSF Audits, SMSF Tax Returns, ongoing education for SMSF Trustees.

We believe in empowering our clients with not only the tools but also the information and know-how to help them take control of their superannuation and make informed decisions for their future.

Book a free phone consultation with a senior adviser today, to discuss how you can user your super to grow your family’s wealth and fund a comfortable lifestyle in retirement.