The benefits of a well-run SMSF can be both rational and emotional.
- Control: with an SMSF, you have greater control in deciding how to invest your superannuation money. You also have the ability to design your fund so that it better meets your specific needs eg to meet family and tax obligations or to have greater certainty when it comes time to paying out your savings.
- Investment flexibility: you decide your SMSFs investment strategy and choose individual investments to suit the needs of the fund's members. This could mean choosing specific company shares, specialist funds or investing in a property of your choice, provided that the investment satisfies the sole purpose test.
- Lower costs could mean more money at retirement: depending on how efficiently you manage your fund, how much super you have, the investments you make, and the extra services and support you want, your SMSF could cost you less than what you would pay to have your super managed by a corporate, retail or industry super fund.
- Tax advantages: Depending on your personal circumstances and the investments you choose for your SMSF, there are potential tax advantages to having an SMSF.
- Insurance: you can hold insurance cover within your SMSF.
- Personal satisfaction: many people who have an SMSF report a great sense of satisfaction in managing their own retirement savings program.
However, along with the benefits of managing your own super come possible risks and complexity, including:
Scenarios where your fund may cost more than a corporate, retail or industry fund. For example, when your fund has a low balance ie at the beginning and end of your SMSF's life cycle.
The ongoing trustee obligations to satisfy administration and compliance requirements. The trustee:
- is ultimately responsible for all actions of the fund
- must act in accordance with all laws that regulate SMSFs, and the fund's trust deed
- is required to lodge an annual tax and regulatory return, pay all liabilities as they fall due and arrange an annual audit of the fund
Considerations if you move, intend to move, or travel extensively, overseas. This may impact your ability to have an SMSF.
If you are unsure, contact us for an open and frank discussion about your options.