What’s involved in running a Self Managed Super Fund (SMSF)?

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Thinking of running a Self Managed Super Fund (SMSF)?

 

SMSFs are one of the fastest growing sectors of the superannuation industry. The Australian government wants to ensure funds are managed properly in order to accumulate retirement benefits for members thereby reducing future reliance on government pensions.

 

Anyone who advises on SMSFs must hold an Australian Financial Services Licence and be qualified in advising superannuation trustees and fund members.

 

The trustee’s role

 

As a trustee you are solely responsible for the day-to-day operation of your fund. You can seek professional advice – for example, on administration, taxation, investing, legal, actuarial and audit matters – but if you break the superannuation rules, the “buck stops with you”, the trustee.

 

Getting it wrong whether by accident or carelessness can have serious ramifications.

 

It can mean loss of concessional tax status for your fund, fines, or civil and even criminal penalties for the trustee. It could even mean you are banned from acting as director of a company.

 

Increase your retirement benefits

 

A properly planned and operated fund should significantly increase retirement benefits. As an example, superannuation regulations require all super funds to have a written investment strategy. This will set out what the fund is trying to achieve, taking into account the circumstances of the members and any employer contributor. Typically, it will provide a benchmark asset allocation setting out the types of assets the fund will invest in to achieve its goals.

 

Related Post: Top 10 Tips to Prepare for Retirement

 

Related Post: Living your Ideal Retirement

 

Regular reviews are required

 

A long-term strategy is impractical unless it is monitored and reviewed regularly and this is a requirement for all SMSFs.

 

Although this might seem like an extra impost, the upside of regular reviews of your fund strategy is that you potentially achieve superior results from your investments.

 

Do it right

 

Sadly, many individuals and businesses have been encouraged to set up and run SMSFs for the wrong reasons, attracted by the promise of low fees. As is often the case, “you get what you pay for” and poor advice can mean trouble with the regulator and an under-performing super fund. Do it right and do it well and you will be the one who wins in the end.

 

Related Post: Moving your Self Managed Super Fund (SMSF) into pension phase.

 

Watch: SMSF – You can’t do it all yourself – ATO

 

Disclaimer:
This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate to your situation. It is recommended that you obtain financial, legal and taxation advice before making any financial investment decision. Prime is bound by the Australian Privacy Principles for the handling of personal information.

 

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Alexia

About the Author:

Prime is an Integrated Wealth Management Firm for business owners and family groups. Prime’s goal is to become the Premier Partner to Accountants for Growth, Succession and Integrated Wealth Management and to deliver personalised advice to clients for a secure financial future.