Self-managed super funds hold a large share of Australia's retirement savings, with hundreds of thousands of funds and more than a million members. For the latest figures, see the ATO's SMSF statistics.
But SMSFs bring their own complexity, and they aren't for everyone.
Before you start one, ask yourself
- Is it purely for retirement savings?
- Do you have the expertise to run an SMSF?
- Will the benefits be worth the risk and the cost?
- How will it affect your current financial situation?
Why SMSFs appeal for retirement planning
Control
An SMSF gives you control over the fund's investments, insurance cover, retirement planning and tax strategy, within the superannuation rules.
Flexibility
You choose where the fund invests: shares, property, fixed interest, cash and more. Before you decide, consider the risk you can tolerate, your investment objectives and how long until members retire.
Tax
A complying SMSF pays tax at concessional rates on its income, generally 15% while members are building their balance, and in the retirement phase the tax can be lower still. Other rules can apply to members with very large balances, so check the ATO's current rules.
Insurance
The fund can hold insurance for its members, including life cover.
With greater control comes greater responsibility. Advice and support from professionals can make it easier.
If you're a trustee, or thinking of becoming one, talk to your accountant or a licensed financial adviser.