To understand how to run your own SMSF, start with what a self-managed super fund is. It is a private superannuation fund that its members manage themselves. The ATO regulates SMSFs. Generally every member must be a trustee, or a director of the fund's trustee company, and the trustees are responsible for every decision the fund makes. An SMSF can have up to six members.
An SMSF is different from the large funds regulated by APRA, the Australian Prudential Regulation Authority, where members pool their savings and a professional trustee invests them.
An SMSF is a legal structure with one purpose: providing retirement benefits for its members.
Your duties if you run an SMSF
Running your own fund is a serious commitment. As a trustee, or a director of the trustee company, you must:
- use the fund's money only to provide retirement benefits
- carry out the legal duties of a trustee
- prepare, and regularly review, an investment strategy that meets members' retirement needs
- have the fund audited every year by an approved SMSF auditor
- keep full records of everything the fund does
What you need
- Enough money to set the fund up and to make its yearly running costs worthwhile
- Time to manage the fund, research and invest
- The skills to make sound, logical investment decisions
- Good financial experience, or advisers who have it
- A plan for members' insurance, such as life, total and permanent disability and income protection cover
If you're a trustee, your accountant or financial planner can help you with each of these duties.