What is a Self Managed Superannuation Fund
A Self Managed Superannuation Fund is a small superannuation trust that has the primary purpose of providing retirement benefits to the members, and where the members themselves act as trustees of the fund. This means that the members control and run the SMSF.
A SMSF offers members greater control over their retirement savings than other types of superannuation funds such as industry or retail super funds. This includes wider investment choices and greater control over investments.
A SMSF also pays retirement benefits, such as pensions and annuities, directly from the fund.
Of the $1.23 trillion invested in superannuation as at 30 June 2010, $390.8 billion was in Self Managed Super Funds. That’s 31.8% of all superannuation funds, with SMSFs now representing the largest slice of the super industry.
Lower fees and better performance
A Commonwealth Government report titled A Statistical Summary of Self-Managed Superannuation Funds (December 2009), based on ATO and APRA data, found SMSF members generally pay lower fees and that, on average, SMSF investments performed better than all other super funds over 2006, 2007 and 2008.
More control and greater flexibility over investments
SMSF members can choose where their retirement savings are invested, with options including listed shares, bonds, listed investment companies (LICs), exchange traded funds (ETFs) and direct property.
This flexibility in investment options allows SMSF members to actively manage their investments. With a hands-on investment approach, SMSF members can quickly adjust their portfolios as markets change.
How a Self Managed Super Fund could benefit you
Depending on your individual situation, the advantages of an SMSF may include:
• tailored tax management on investment income and capital gains
• greater flexibility in investment choices and asset selection
• control over your total investment portfolio, with the ability to take account of the risk profile of all your assets, including those held outside superannuation
• the ability to pool your resources with up to 4 fund members with similar financial objectives, such as family members
• maximum flexibility in establishing and managing pensions, including account based, transition to retirement and term allocated pensions as well as planning your Estate
• greater flexibility for accessing Centrelink benefits such as the age pension
• investing in direct property
• the ability to transfer personally owned listed shares, business real property and managed funds directly into your superannuation fund, and
• the ability to own business real property in your superannuation fund, to assist your business cashflow.
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