Self-managed super funds (SMSF)

A self-managed super fund (SMSF) is a private super fund that you manage yourself. SMSFs are different to industry and retail super funds.

When you manage your own super, you put the money you would normally put in a retail or industry super fund into your own SMSF. You choose the investments and the insurance.

Your SMSF can have no more than six members. Most SMSFs have two or more. As a member, you are a trustee of the fund — or you can get a corporate trustee. In either case, you are responsible for the fund.

While having control over your own super can be appealing, it’s a lot of work and comes with risk. 

Only set up your own super fund if you’re 100% committed and 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 Australian Financial Complaints Authority (AFCA).
  • You could lose insurance if you’re moving from an industry or retail super fund to an SMSF.


SMSFs take time and money

Managing an SMSF is a lot of work. Even if you get professional help, it’s time-consuming.

You need enough time to set up the fund, and time to manage ongoing activities, such as:

  • researching investments
  • setting and following an investment strategy
  • accounting, keeping records, and arranging an audit each year by an approved SMSF auditor


SMSF trustees spend on average eight hours a month to manage an SMSF. That’s more than 100 hours a year. (Source: SMSF Investor Report, April 2019, Investment Trends)

The set-up and running costs can be high. Ongoing costs include:

  • investing
  • accounting
  • auditing
  • tax advice
  • legal advice
  • financial advice


You need financial and legal knowledge

You need the financial and legal knowledge and skills to:

  • understand different investment markets, and build and manage a diversified portfolio
  • set and manage an investment strategy that meets your risk-tolerance and retirement needs
  • comply with tax, super and investment regulations and laws
  • organise insurance for fund members


If you want to set up an SMSF

If you are 100% sure about managing your own super fund, start researching investment options, and consider getting professional advice.

Research your investment options

Part of the appeal of an SMSF is controlling and having access to a broader range of investments.

However, there are some very strict rules about what you can invest your super in. Check restrictions on investments on the ATO website.

Set up your SMSF

All SMSFs are regulated by the ATO.

Because everyone’s situation is different, it’s always best to get financial advice before you make a decision or any investments. You can get independent advice from a licensed financial adviser.

When all feels overcomplicated, you can always hire a specialist. Our team of financial advisers and accountants will be happy to sort everything out for you. Contact us today.

Information source www.moneysmart.gov.au

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Factual Information Only Disclaimer

This website contains factual information only and does not consider your personal circumstances, needs, objectives or financial situation. This factual information is not intended to imply any recommendation or opinion about a financial product. This information does not constitute financial advice or taxation advice, and the general nature of the content might not be applicable to you or your situation. Before acting on any information, you should seek professional advice and verify our interpretation/s before relying on the content or calculators within this website, while also considering its appropriateness in relation to your personal situation.

Notice

ASIC is simplifying the superannuation and retirement planner calculators while undertaking a scheduled review of assumptions.

As of 17 April 2020, these calculators will use a single set of assumptions.

The default assumptions in this calculator are based on Treasury’s long-term retirement income models. For more information on Treasury’s long-term retirement income modelling assumptions see the 2019 Treasury Research Institute paper ‘Accumulation of superannuation across a lifetime’.

Assumptions

The calculator works for accumulation funds only. It will not work for defined benefit funds.

We assume your account balance will receive all income and outgoings mid-year, apart from Government co-contributions which we assume are received at the end of the year.

Results are in today’s dollars

Results are shown in today’s dollars, which means they are adjusted for inflation.

Inflation assumptions

We make the following default assumptions on inflation (which you can change under the ‘Advanced  – insurance and inflation’ section that appears below calculator results):

  • 2.5% each year due to the rising cost of living (CPI inflation)
  • A further 1.5% each year due to the cost of rising community living standards


Contributions

We assume that your employer contributes an amount equal to 10.5% of your ordinary time earnings (you can change this in ‘You and your super fund’).

In future years we assume that:

  • Your employer and voluntary contributions will increase with inflation
  • You will satisfy the Work test at older ages and so are able to contribute
  • From 1 July 2021, the SG rate used for the default employer contribution rate is 10%. The SG rate is assumed to increase by 0.5% per annum until the SG rate reaches and stays at 12% from 1 July 2025 onwards.


Investment return

We make the following default assumptions for investment return and earnings tax:

  • Investment return before investment fees and earnings tax of 7.5% each year
  • An effective tax rate on investment earnings of 7.0%.

Actual returns will vary significantly from year to year and could be negative in some years, particularly for investment mixes where more is invested in shares and property. This calculator does not allow for such variations. You can vary assumptions in ‘You and your super fund’ and ‘Compare alternative fund’.

There is a lot to consider when comparing investment options between funds. Risk and return objectives and asset allocation within investment options may differ between funds and should be taken into account when comparing funds.

Further information

  • Super contributions must remain in super until you have met a condition of release. Weigh up the benefits of extra super against your other priorities, for example paying off your credit cards.
  • You will need to refer to your latest super account statement.

Disclaimers

  • This is a model, not a prediction.
  • The results from this calculator are based on the limited information that you have provided and assumptions made about the future. The amounts projected are estimates only provided by this model and are not guaranteed.
  • This calculator cannot predict your final superannuation benefit with certainty because this will depend on your personal circumstances including unexpected events in your life and external factors such as investment earnings, tax and inflation. This calculator assumes that you can make steady, predictable contributions and that all assumptions including these external factors will operate at set, steady rates for as long as you remain in the fund, even if events turn out differently from what’s assumed. These assumptions are essential so the calculator can show the effect of things you may be able to control, such as choosing a low-fee fund.
  • You should consider updating the projections provided by this model regularly as your circumstances may have changed. You can also change and update some of the assumptions to reflect your personal circumstances.
  • Do not rely solely on this calculator to make decisions about your retirement, there may be other factors to take into account. Consider your own investment objectives, financial situation and needs. You may wish to get advice from one of our licensed financial advisers.

How do I find my TFN?​

If you do not know your tax file number you can locate it via your income tax assessment, employee payment summaries, MyGov online account or you can call the ATO directly on 13 28 61 and request it over the phone.

Why we require your Tax File Number (TFN)?

Lost Super Finder will use the ATO portal to track down your Lost and Missing super accounts. Without a valid TFN being supplied, we are unable to complete the superannuation search for you.