Superannuation, a lifelong partnership: Should it be with a Self-Managed Super Fund (SMSF)? (Part 1)

Self-Managed Super Fund

Let’s start talking about Self-Managed Super Fund (SMSF). Your lifelong partnership with superannuation generally begins when you are over the age of 18 years and become an employee, or you are under 18 but work over 30 hours a week. In March 2023, under superannuation guarantee, employers are required to pay 10.50% of ordinary time earnings, this will increase to 11% from 1 July 2023.

Potentially, you can be contributing to your superannuation for 45 years or more, before you are able to withdraw the funds from the superannuation environment.

Who looks after my superannuation while in the superannuation environment?

Superannuation contributions can be made to a complying superannuation fund. Contrarily a complying superannuation fund can be a Self-Managed Super Fund (SMSF) or an Australian Prudential Regulation Authority (APRA) regulated superannuation Fund. Examples of APRA funds are Australian Super, Aware Super, Care Super, CBUS Super, Equipsuper, HESTA, HOSTPLUS Superannuation Fund, MLC Super Fund, Australian Retirement Trust and UniSuper.

What is a Self-Managed Super Fund?

comparatively the main difference between a SMSF and an APRA regulated fund is that you are in charge of running a SMSF. This provides flexibility with and control over assets and estate planning. Trustees of the SMSF are there to ensure the funds are maintained for the purposes of providing benefits to the members upon retirement. When setting up a SMSF you take on the role of either, a trustee or a director of a company that is the trustee.

Basically the trustee company is called a corporate trustee. As at 30 June 2022 the ATO reported, based on registrations and ABR data, 66% of all SMSFs had a corporate trustee. Statistics show an increasing favour in adopting a structure with a corporate trustee as opposed to individual trustees. The government website https://moneysmart.gov.au/how-super-works/self-managed-super-fund-smsf provides further information to consider if a SMSF is right for you.

What are your responsibilities?

A familiar theme is the emphasis placed on the responsibilities of trustees. But the trustees must ensure the fund is complying with super and tax laws to enable the fund to be entitled to tax concessions and ensuring the members benefits are protected. The trustees’ duties are set out in a trustee declaration that must be signed within 21 days of becoming a trustee or director of trustee company.

In a SMSF the trustee holds and invests the fund’s assets for the benefits of members. All members are trustees or directors of a corporate trustee. The trustees have the responsibility of running the fund and making decisions that affect the retirement interests of all members and themselves.

The Australian Tax Office (ATO) is the regulator of SMSFs. The ATO highlights trustees are ultimately responsible for SMSF. https://www.ato.gov.au/super/self-managed-super-funds/.

The information provided on this website is general in nature. You should consider seeking independent financial advice from a licensed financial adviser if you are considering setting up a SMSF.

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