What is an SMSF?
26 April 2024
A self-managed super fund (SMSF) is a private super fund that you manage yourself. An SMSF can have no more than six members. As a member, you are a trustee of the fund (or you can have a corporate trustee) and you are responsible for the fund.
Key facts
- $9100 was the median total expense for running an SMSF in 2021 – 2022 (ATO SMSF statistical overview 2021-2022)
- 8+ hours per month is the average time it takes to manage an SMSF (Moneysmart, 2023)
- Large SMSFs earn broadly similar net returns to APRA regulated funds, but smaller ones (with less than $500 000 in assets) perform significantly worse on average due to the higher average costs they incur because of their small size.^
How does an SMSF compare to an APRA regulated super fund?
| SMSF | APRA regulated super fund |
|
|---|---|---|
| Administration |
Managing an SMSF can take longer than expected. It takes over 100 hours per year to manage an SMSF. |
Your super will be managed be a team of professional experts in superannuation fund administration, finance and compliance. |
| Investment choice |
As a trustee of an SMSF you develop and implement the fund’s investment strategy and make all investment decisions. |
Most super funds will allow you to choose from a range of investment options to suit your needs, but generally you can’t choose the specific assets your super will be invested in. |
| Insurance |
Trustees must consider whether to purchase insurance for their members. Insurance premiums may be higher than in other super funds. |
Most offer insurance cover to members. Member insurance usually costs less as large funds can get discounted premiums. |
| Legal obligations | As a trustee of an SMSF you are responsible for operating your fund within the law, and need to keep up to date with changes in super and tax laws. If you don’t, you may face severe penalties and your fund may suffer tax consequences. * | Compliance risk is borne by the licensed trustee*. |
If you are considering an SMSF remember that it may take more time and knowledge than you think. Make sure you are aware of the responsibilities, costs and potential risks involved. Before setting up an SMSF make sure you get professional financial advice from an SMSF specialist.
SMSF scams
If someone offers to withdraw your super, help you control your super, or move it to a self-managed super fund (SMSF) so you can get the money, it could be a scam. Learn how to spot a super scam and what you can do to protect yourself by visiting ASIC’s Superannuation scams webpage.**
Sources:
https://www.afr.com/wealth/superannuation/10-reasons-to-start-an-smsf-20211005-p58xc1
https://www.superguide.com.au/smsfs/smsfs-and-life-insurance
*https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/thinking-about-an-smsf/consider-the-cost-time-and-skills
** https://moneysmart.gov.au/financial-scams/superannuation-scams
^Productivity Commission Inquiry report overview, Superannuation: Assessing Efficiency and Competitiveness, Dec 2018
Prepared by BUSS(Queensland) Pty Ltd ABN 15 065 081 281, AFSL 237860, Trustee of Building Unions Superannuation Scheme (Queensland) (BUSSQ) ABN 85 571 332 201. This information is general advice only and does not take into account or consider your personal objectives, financial situation or needs. Before acting, you should review the relevant Product Disclosure Statement to ensure you have all the information about the relevant BUSSQ product and how it works and consider the appropriateness of the information to your needs or seek independent advice from a properly qualified professional. Past performance is not a reliable indicator of future performance.