Things You Should Consider if Thinking About Starting Your Own Self Managed Superannuation Fund

Thursday, 04 August 2016 11:25

Ava Anderson

The self managed superannuation fund is one of the fastest growing superannuation funds in Australia. What this fund offers over any other fund is flexibility, which enables you to invest into many different assets that might not be available through any other super fund, like direct shares, for examples, or property. The sole purpose of the self managed superannuation fund is to accumulate funds for your retirement days. These funds are different from others, and are monitored by the trustees of the fund (we’ll discuss trustees later).

However, this type of retirement fund isn’t for everyone, as it can be truly complex to run, since you will have to comply with some legal obligations. Hence, you should consider hiring professional advisers to help you understand the essentials of the self managed superannuation fund, and to give you advice on how to get on the right track. Any decision you make will be a huge financial decision for everyone that is involved within the fund – both the director and trustees.

Here are some of the ground rules and things you should know before considering starting your own self managed superannuation fund.

• An SMSF is set up as a small super fund (1 to 4 members) and is managed by individual trustees/directors who must be members of the fund.
• There are strict rules that imply that you must use all the accumulated funds for the sole purpose of providing yourself and the trustees with retirement benefits.
• The initial investments typically ranges around 200,000.00 dollars.
• There are tax penalties if you commit any wrongdoing and defy the sole purpose of using the accumulated funds strictly for retirement benefits.
• In order to “trigger” the benefit phase of the fund, you need to meet one of several requirements such as: reaching age 65, permanent incapacity, permanently retiring after reaching preservation age, or reaching preservation age.
• You almost never have to do anything on your own, there are legal professionals and advisers that will help you along the way.

The self managed superannuation fund is highly recommended by the Australian government and is supported with tax benefits. Setting your own super fund can be an intimidating process and you might be hesitant of whether you should start one or not. However, as I mentioned previously, there are many ways to make this process understandable – by hiring a good financial adviser that specializes in SMSF.