A self-managed super fund (SMSF) is a trust that stores and manages money and investments on behalf of members. The purpose of the Fund is to provide benefits to members at retirement or at death.
For many Australians, the SMSF is one of the biggest investments they've ever had. This is why most people keep their super cash in professionally managed super funds. The growth of SMSF over the last decade has been phenomenal. Approximately $ 10 billion is invested in self-managed super funds each year as investors often turn away from traditional industrial and retail funds at the recommendation of auditors, promising greater flexibility and better returns.
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Australians turn to SMSF for a variety of reasons. SMSF gives people control over their super, offers greater investment flexibility, and is the perfect environment to implement a tax planning strategy that takes advantage of tax breaks to save on pensions in Australia. Importantly, the administrative fees for the SMSF are often lower than those charged as part of other pension decisions.
According to the ATO rules and regulations, the SMSF can have one to four members, with each member being a guardian. When someone creates a self-managed super fund, they must:
- Acting as a trustee who places important legal obligations on you
- Use the money only for providing retirement benefits
- Establish and follow an investment strategy to ensure the fund meets your retirement needs
- Keep comprehensive records and ask qualified auditors to carry out annual inspections
If you are considering setting up a self-managed super fund, you will need to do your research and understand your responsibilities.