Self-Managed Super Funds (SMSFs): Pros, Cons and Setup

A self-managed super fund (SMSF) is a private superannuation trust that you manage yourself, with up to six members. The main appeal is control: you choose the investments, from shares and property to term deposits and managed funds, within the rules set by the Superannuation Industry (Supervision) Act.

The advantages can be significant. You have direct visibility over where your retirement capital is invested, greater flexibility around estate planning, and the ability to pool balances with family members. For some, the ability to invest in direct property or unlisted assets is also attractive.

The downsides are just as real. Running an SMSF takes time, knowledge and discipline. Trustees are personally responsible for compliance, including annual audits, tax returns, investment strategies and record-keeping. The costs can also outweigh the benefits for smaller balances, which is why the ATO and most advisers warn against establishing an SMSF with less than around $200,000 to $250,000 in super.

Setup involves several steps: establishing the trust deed, appointing trustees, registering with the ATO, opening a bank account and rolling over existing super balances. From there, an investment strategy must be documented and reviewed regularly, and an independent audit must be completed each year.

If you have any questions about whether an SMSF is right for you, feel free to get in touch.