Run your own Super Fund

The Australian Tax Office statistics show that the number of self-managed super funds continues to grow, with the number of self managed funds now in existence in Australia around 600,000.

In total, self-managed super funds (SMSFs) hold some $747 billion in assets for 1.1 million members.

Interestingly, SMSFs tend to invest conservatively, with approx 30 percent of SMSF investments in the form of cash or term deposits and 21 percent in listed shares and equities. In contrast, offshore investments remain consistently below the one percent mark.

But there are still concerns that people are setting up SMSFs with too few assets. It is suggested that if you have less than $200,000 in assets, then the costs associated with running a fund become prohibitive.

In addition, care needs to be taken to understand whether people are up to the task of being trustees of an SMSF.

The Tax Office has on a number of occasions emphasised the need for people considering establishing an SMSF to think long and hard about their ability to take on the role of trustee. Trustees have to ask themselves whether they have the time and skills to manage their own superannuation fund.

There are four questions you need to consider when deciding whether to establish your own fund:

•   Is the fund for retirement benefits only?

•   Do you have the time and skills to manage the fund?

•   Will the benefits be worth the costs? And

•   How will switching to a self-managed fund affect your current super benefits such as life or other important insurances?

Running your own super fund has significant advantages in the right circumstances. If you think you should consider a self managed super fund, discuss this with a Certified Financial Planner.