Things you need to know about self-managed superannuation funds

28 January 2022, 5:10 am

Things you need to know about self-managed superannuation funds

Self-Managed Super Funds (SMSFs) have become a popular choice for many people in Australia. 

The latest available ATO figures indicate there were 597,900 SMSFs in Australia in June 2021.

Superannuation is a widely used and often legally mandated method of saving for retirement. SMSFs have become quite popular as they allow people to directly control and manage how their retirement savings are invested.

However, there are some important things about self-managed superannuation that you should know about.

According to the website:

  • You are personally liable for all the fund’s decisions — even if you get help from a professional, or if another member made the decision.
  • Your investments may not bring the returns you expect.
  • You are responsible for managing the fund even if your circumstances change — for example, if you lose your job.
  • There may be a negative impact on your SMSF if there is a relationship breakdown between members, or if a member dies or becomes ill.
  • If you lose money through theft or fraud, you won’t have access to any special compensation schemes or to the Australian Financial Complaints Authority (AFCA).
  • You could lose insurance if you’re moving from an industry or retail super fund to an SMSF. See consolidating super funds.
  • A self-managed super fund means you are choosing where to invest the money and this means you’ll have to have some knowledge of the best options, and also the time to do the research.

Some people use them as a way of investing in property, but there are often special rules when it comes to using an SMSF to buy a property. 

For example, you can not purchase a property in an SMSF and then live in it. A key point to remember about superannuation in all forms is that it is there for your retirement, not things that would enable you to obtain immediate benefits.

Also, banks can apply different lending criteria and rules. For example, some banks will require you to have a 30% deposit for a property bought in an SMSF, whereas you might only need 10% deposit if buying in your own name. Of course, these are general examples and your own situation may differ from this.

In any event, we recommend you get professional advice about whether or not an SMSF is right for you before going ahead and setting one up. Those are some of the things you need to know about self-managed superannuation funds

Call our team for a confidential and no-obligation discussion about SMSFs and the benefits and risks for you.

The information in this article is general in nature and does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.