Superannuation funds exist as a way of saving for retirement.
There are two main types of superannuation funds, public offer funds and self managed super funds (SMSF). The difference between a public offer fund and an SMSF is that the members of an SMSF are also the trustees of the fund. The members of the fund manage the SMSF for their own benefit and are responsible for the compliance in relation to superannuation and tax laws. This is in contrast to public offer super funds whose trustees manage the retirement savings on behalf of all their members and like the SMSF are responsible for the compliance of the fund.
In both cases the trustee’s actions are determined by the funds trust deed that sets out the governing rules of the fund and the relevant legislation.
SMSFs suit those who like more direct control over the way their retirement savings are invested and they allow a range of asset types that may not be available in public offer super funds. Through an SMSF you can invest in the usual assets such as cash, term deposits, shares, managed funds and property the same as a public offer fund as well as a range of other asset types including our enhanced wealth offering.
An SMSF gives you more control over tax within the fund. As trustee of your SMSF you can structure your fund’s investments to maximise tax effectiveness and to time the realisation of capital gains to best suit your situation.
Your estate planning is more certain with an SMSF as it is you, the trustee, who controls the distribution of superannuation benefits on the death of a member of the fund.
The SMSF can have between one and four members and all members are trustees. Trustees can be structured in one of two ways, as individual trustees or as a corporate trustee whereby a company acts as trustee and each member is a director of the company. A corporate trustee provides more flexibility to the SMSF however ongoing costs are higher than for individual trustees.
The SMSF has its own tax file number (TFN) and Australian Business Number (ABN) and is required to have its own bank account.
It is generally accepted that an SMSF will be more cost effective if you have $200,000 or more of super funds as many of the costs associated with an SMSF are fixed. These costs include the establishment cost and the ongoing running costs.
Trustees of the SMSF have a range of obligations that have to be met. These include developing an investment strategy, financial record keeping, having the fund audited and completing a tax return. You can complete these tasks yourself or engage SMSF specialists such as Principal Partners who can arrange this for you.
We provide a comprehensive range of support services for SMSF trustees including financial and strategic advice, accounting services, personal insurance and estate planning advice.