What is a Self Managed Super Fund (SMSF)?
An SMSF is a Self-Managed Superannuation Fund. And, as the name suggests, it is a type of superannuation fund that is owned and operated by you. What is probably the most distinguishing factor of an SMSF from large retail superannuation funds is the fact that the members of the fund are also the trustees of the fund and as such, are the ones who make all the decisions.
As the trustees of the fund, it is the members who make all decisions in relation to the fund and its investments. As long as superannuation and taxation laws are followed, this can provide SMSF members with a number of benefits and advantages that are not practically available through other fund types.
There are a number of advantages to running your own SMSF. Some of these include:
- As the trustee of the fund you can choose any investment type you like including direct investments such as shares and property.
- Having an SMSF allows you to transfer certain assets, for example business premises and listed shares, that you own personally (or through your business) into the fund which can provide a number of benefits.
- It is also possible for an SMSF to borrow money for investment purposes where specific rules are followed.
- As the trustee of the fund, you (along with any other trustees) will be the one(s) who will decide what happens with your superannuation benefits – as long as you stick to the superannuation rules. For example, you get to decide the form in which retirement benefits are taken (e.g. as a pension, a lump sum, or a combination) and also who should receive member death benefits.
- You can also choose the type and level of personal insurance cover you require and have the premiums paid by your SMSF.
- As the costs involved in running an SMSF are generally fixed dollar costs, that is they do not increase just because the amount of super you have increases, they can be cheaper to run than many retail funds. According to the ASIC's MoneySmart website, this happens where SMSF balances are over $200,000 – by pooling together the superannuation balances of several family members, this can be an easily achievable target.