Self Managed Super Fund

Self-managed super funds (SMSF)

When you manage your own super fund, you are in control of the investments as well as the insurance. You are also a trustee of the fund — or you can choose to have your company trustee serve that role.

While a self-managed super is appealing and a good option for some people, it’s not suitable for everyone. Only set up your own fund if you’re fully committed and fully understand what’s involved.

The risks and responsibilities of SMSFs

All members of an SMSF are responsible for the fund’s decisions and for complying with the law.

These responsibilities come with risks:

You are personally liable for all the fund’s decisions — even if you get help from a professional, or if another member made the decision.
Your investments may not bring the returns you expect.
You are responsible for managing the fund even if your circumstances change — for example, if you lose your job.
There may be a negative impact on your SMSF if there is a relationship breakdown between members, or if a member dies or becomes ill.
If you lose money through theft or fraud, you won’t have access to any special compensation schemes or to the Superannuation Complaints Tribunal.
You could lose insurance if you’re moving from an industry or retail super fund to an SMSF.

How much do you need to setup and SMSF?

In the past, a common rule of thumb in the SMSF industry was that you should have at least $200,000 in superannuation benefits to justify setting up an SMSF because of the fixed fees involved.

The reality is that you no longer have to pay high administration fees to run your own fund. Thanks to automation and the internet, services are now being provided more efficiently and at a lower cost.

Ultimately the amount you need as a starting balance is a personal decision. BHPW offers a complementary consultation to discuss your personal circumstances and whether an SMSF is right for you.