Is a Self-Managed Superannuation Fund Worth It?

Around 1,100,000 Australians operate self-managed superannuation funds (SMSF) and according to the Australian Taxation Office, the median value of those funds, in June 2020, was $734,000.1

In December last year, the Australian Securities and Investments Commission removed guidance which previously said most SMSFs need to have at least $500,000 to compete with regular superannuation funds.2 This is great news for those who are interested in taking ownership of their own investments for retirement.

However, there’s a lot to managing your own retirement investments. Setting up your own SMSF is a major financial decision – you will be making all the decisions about your investments. You’ll need to have the skills and sufficient time to research those investments, manage your fund and to ensure your compliance with super and tax laws… the Australian Taxation office imposes strict rules for SMSFs and there are harsh penalties for those who disobey them.

First Rules

Important to note is that an SMSF must be run for the sole purpose of providing retirement benefits for its members.

Additionally, every decision you make as your SMSF trustee must be in the best financial interests of the fund’s members.

And it is illegal to access your SMSF fund early to buy a holiday home, jewellery to wear or artworks for your home.

Beware the Costs

Before you jump into running an SMSF, it’s also wise to consider what it will cost you – because you may find the administrative costs outweigh those associated with other types of super fund.

You will be faced with annual costs for an independent audit of your fund’s financial statements to assess its compliance with super law, and the supervisory levy. Additionally, you may need to pay for preparation of your annual SMSF tax return; valuations of the fund’s assets; actuarial certificates for any paying income streams (pensions); financial advice; legal fees; assistance with fund administration; and insurance for members.

Is an SMSF for you?

The ATO has a wealth of information about setting up and managing an SMSF. Experts at The Ayers Group can also introduce you to financial planners and accountants who can provide individual advice. The Ayers Group can contribute to both SMSF and standard super funds. Talk to an expert at the Ayers Group today.