Self Managed Super Fund
Whether it be decorating, renovating or landscaping, it’s hard to turn on the television these days without coming across a program encouraging you to do it yourself, or ‘DIY’.
The benefits of household DIY – cost savings, control, a sense of satisfaction – are well known. But what about ‘do it yourself’ superannuation (sometimes called ‘self-managed’ superannuation)? Why are more and more Australians deciding to ‘do it themselves’ when it comes to saving for retirement?
For the right person, self-managed superannuation can offer significant benefits.
First and foremost, is flexibility and control. With the help of an Aspire2 specialist, a self-managed superannuation fund can be tailored to your individual needs. For example, you can include a wide range of assets and investments in your superannuation, including property, shares and other direct investments. Self-managed super funds can also offer flexible and tax-effective estate planning strategies by paying different types or amounts of pensions to dependent adults and children under the age of 18 from the same estate.
However, with added control comes greater responsibility. You need to make sure the fund meets all the relevant regulations, including drafting the legal documentation to establish the fund, appointing trustees, registering for GST, lodging statements with the tax office, keeping minutes and setting up accounting systems, including an audit program. And while the risks of home DIY may be a sore thumb or unplanned hole in the wall, there are substantial penalties if your self-managed super fund does not comply with regulations. These added responsibilities and potential penalties should be carefully considered before taking on a self-managed super fund.
All of this takes time and, not surprisingly, costs money. For example, an annual cost of $2,000 to do all this administration may be cost-effective for a fund worth $500,000 (representing 0.4% per annum), but it is excessive for a fund of $50,000 (4% per annum).
The added costs and potential risks can be managed with professional advice and by outsourcing the administration of a self-managed superannuation fund. Much of the legal documentation – for example, a trust deed – can be purchased in template form and adapted to your requirements with the advice of a solicitor.
More and more people are discovering the benefits of managing their own superannuation funds – there are now more than 400,000 self-managed superannuation funds in Australia. But before you join the DIY revolution, make sure it’s right for your circumstances and needs. For more details or advice, click here or call Aspire2 now on 9322 7029.
