Questions to ask before winding up

To better understand your needs and goals when it comes to saving for retirement and to help you determine whether a self-managed super fund is right for you, ask yourself the following questions. 

If you’d prefer to speak to a Findex SMSF specialist over the phone to discuss the process and your options you can book a call-back online.

Questions to ask before winding up

How much time and effort would you like to spend on your super?

As a trustee of a self-managed fund, the commitment required to keep the fund running is much higher than in other funds. Trustees will need to spend time ensuring they complete all required documents and manage the fund’s investments. While some members of SMSFs leave this to their accountant or financial adviser, it’s important to remember that the accountability ultimately lies with the trustees/members of the fund, meaning any oversight is their responsibility. Penalties apply if the Trustee’s responsibilities are not met.

In an APRA-regulated fund like CareSuper, the Trustee of the fund looks after all of the administration, investing, legal, audit and accounting requirements, meaning members do not need to take on this responsibility.

What level of investment and superannuation expertise do you have?

In a self-managed fund, a good understanding of investing, super-related legal obligations and how to run the fund is paramount. Some advisers and accountants will offer to do a lot of the work, but they are likely to charge fees for these ongoing services and more importantly, may not be experienced investors. 

Collective super funds employ teams of experienced experts to ensure the fund runs smoothly and is compliant with legal and regulatory obligations. This provides members with the flexibility to ‘set and forget’ their super if they wish, or take a more active role, knowing that the risks and options are clearly identified.

What type of investments are you interested in?

Trustees of collective funds like CareSuper hold a diverse range of investments across several asset classes.  Because of their size and commercial nature, they can access some investments not generally available to individuals such as infrastructure assets and other unlisted investments both in Australia and overseas. 

SMSFs also offer a wide range of investment options including options that may not be offered in regular super funds such as direct property and alternative asset classes. Trustees may invest in assets of their choice as long as they are separate from the personal and business affairs of fund members.

Are you covered if something goes wrong?

All individual members of an SMSF can be held liable for decisions or actions that affect the fund made by themselves or others. Any losses are borne by all members of the SMSF and penalties apply if the fund’s responsibilities are not met.

With regular super funds like CareSuper, the responsibility for all investing, administration and regulatory requirements is held by the Trustee of the fund and not the individual members.

Do you have or need insurance cover through your super fund?

CareSuper and other super funds offer default Death and Total & permanent disablement insurance for Employee plan members. This is often at competitive group rates and members have the option to change or opt out of the cover at any time. Premiums are deducted from directly from the super account so they don’t affect the members’ take-home pay.

Self-managed super funds do not offer automatic insurance and this would need to be organised by the members in the fund.

Do the returns of your SMSF outweigh the costs?

Rainmaker analysis of ATO performance data shows that self-managed funds with $200,000 to $1 million in assets underperformed super fund benchmarks in four out of five years from 2008-2012. Only self-managed funds with more than $1 million in assets outperformed the benchmark set for APRA-regulated funds.*

The ATO estimates it costs around $2000 a year (including the annual supervisory levy) to run an SMSF, but this will vary depending on how much work is outsourced and fees charged by service providers. Investment costs will be determined by the investments selected.  Whether this cost is covered by investment returns is largely linked to the amount of assets in the fund.

A clear fee structure is outlined with regulated funds like CareSuper and the costs to run the fund are spread across all members.

Are you getting the right advice?

When seeking advice around your finances, it’s important to ensure that the adviser has your best interests in mind.  

Many accountants and financial advisers encourage their clients to take out a self-managed super fund, and while this may be suitable in some situations, you should be aware of the reasons why they have recommended this for you.

Ultimately, the liability of an SMSF lies with the members of the fund, not the adviser, meaning members should understand and have a hand in all of the SMSF’s decisions.

Do you know what is involved with winding up an SMSF?

Winding up an SMSF can be complex, given the amount of paperwork and tax implications involved.

Further issues can arise if members don’t have the knowledge to close the fund, if illiquid assets need to be sold and if any disagreements occur between members (for example as a result of divorce proceedings).

That’s why we’ve partnered with Findex to offer an SMSF wind up service.

If you’re interested in closing your self-managed super fund, or if you’d like to speak to someone about the process, request an obligation-free call-back from a Findex SMSF specialist, who will discuss the process with you in greater detail and outline the next steps.