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Self managed super funds

Check out Sunsuper's simple, easy to use glossary of all the different terms you might come across when researching superannuation. Find a clear and simple definition for anything relating to self managed super funds, from SMSF fees to SMSF compliance.

 

Self managed super fund

A self-managed super fund is also referred to as SMSF or DIY super fund. An SMSF is a super fund you can set up to manage yourself (or pay others to help you do so) to provide for your retirement. Estimates suggest a minimum balance of $200,000 – $500,000 is required to make an SMSF cost effective relative to other super funds. An SMSF operates in a similar way to large funds like Sunsuper that are regulated by the Australian Prudential Regulation Authority (APRA). SMSFs are regulated by the Australian Taxation Office (ATO) and can have up to four members. All members must be trustees of the fund and are wholly responsible for all decisions relating to investing the fund’s balance and complying with required rules and laws. Before starting an SMSF it is important to consider the set-up and running costs and the responsibility that falls on SMSF trustees for managing the fund; the investment strategy you plan to execute for the fund, including the returns you aim to achieve; insurance cover you may need; and the other trustees in the fund and what happens should this relationship end for any reason. 

 

SMSF trustee

SMSFs are regulated by the Australian Taxation Office (ATO) and can have up to four members. All members must be trustees of the fund and are wholly responsible for all decisions relating to investing the fund’s balance and complying with required rules and laws. Large funds such as Sunsuper have a trustee company with a board of directors responsible for managing the fund and ensuring it operates in the best interests of all members and continues to comply with all legal requirements. 

 

SMSF fees

There are costs and fees involved in setting up an SMSF, meeting compliance and reporting requirements, and winding up an SMSF. Many SMSF trustees also outsource some of the time and expertise required to run an SMSF to accountants, lawyers or other professionals, which also come at a cost. The fees to set up, run and wind up an SMSF can be higher than the fees you’d pay to a fund like Sunsuper to manage your super. Estimates suggest a minimum balance of $200,000 – $500,000 is required to make an SMSF cost effective relative to other funds. 

 

SMSF compliance

SMSF trustees are responsible for complying with a range of legal and reporting requirements in setting up, running and winding up an SMSF. Just some of these compliance requirements include making sure the SMSF has no more than four members and that all members are trustees; meeting all administrative and reporting requirements including lodging returns by the due dates and appointing an approved auditor; making sure the SMSF meets the sole purpose test i.e. it exists to provide retirement benefits to its members; meeting the super contributions rules and not breaching the contributions caps; having and implementing an investment strategy and regularly reviewing it; and complying with benefit payment rules when paying funds out of the SMSF to its members.