There’s a lot to consider. To better understand your needs, goals and legal obligations when it comes to saving for retirement and to help you determine whether a self-managed super fund is right for you, you may want to ask yourself the following questions, as well as any other considerations that are relevant to your specific circumstances.

If you become a trustee of a self-managed fund, it’ll take quite a large commitment of time and effort to complete all required documentation 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 will be your responsibility. Penalties may apply if the trustee’s responsibilities are not met.

At CareSuper, (an APRA and ASIC regulated fund) we look after all the administration, investing, legal, insurance, audit and accounting requirements, meaning members do not need to take on this responsibility or time commitment.

In a self-managed fund, a robust understanding of 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, and probably charge fees for these ongoing services and more importantly, they may not be appropriately qualified or experienced investors. 

CareSuper employs teams of appropriately qualified and experienced professionals to ensure the fund runs smoothly and is compliant with legal and regulatory obligations. This means our members can sit back and stay invested in our default Balanced (MySuper) option, or take a more active role if they wish, knowing that the risks and options are clearly identified depending on the investments selected.

As a trustee, CareSuper holds a diverse range of investments across several asset classes.  Because of our size and experience, we can access some investments not generally available to individuals such as infrastructure assets and other unlisted investments both in Australia and overseas. 

Trustees of SMSFs may potentially be able to invest in other assets of their choice but it’s important to keep those investments separate from the personal and business affairs of fund members. 

All individual members of an SMSF can be held liable for decisions or actions that affect the fund made by themselves or others. It is important to understand that any losses are borne by all members of the SMSF and penalties may apply if the fund’s ongoing legal obligations are not met. 

With an ASIC and APRA-regulated fund like CareSuper, the responsibility for all investing, administration and regulatory requirements is held by the Trustee of the fund and not the individual members.

We offer default Death and Total & permanent disablement cover, and also income protection insurance for Employee Plan members and our age and gender-based pricing model helps us deliver value for you. This is at competitive group rates and members have the option to change or opt out of the cover at any time. Insurance fees are deducted directly from the member’s super account, so it doesn’t affect their take-home pay.

Self-managed super funds do not offer automatic insurance. Members of an SMSF would need to research their insurance and go through the underwriting process themselves based their individual circumstances. 

Advice on the cost-effectiveness of an SMSF, produced by the Australian Securities and Investments Commission (ASIC) says that on average, SMSFs with balances below $500,000 have lower returns after expenses and tax, and will often be uncompetitive, compared to ASIC and APRA-regulated funds.^{^}

Costs associated with an SMSF can include set up costs, legal costs, ongoing and operational costs (such as the supervisory levy), investment borrowing and insurance costs, audit fees and costs to produce annual statements plus any wind up costs 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.

By comparison, CareSuper has a clear fee structure and the costs to run the fund are spread across all members.

For more information see ‘Self-managed superannuation funds – A statistical overview 2017/18’

^{^} Source: https://asic.gov.au/regulatory-resources/financial-services/giving-financial-product-advice/advice-on-self-managed-superannuation-funds-disclosure-of-costs/#cost-effectiveness

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 accountant, meaning members should understand their obligations when making SMSF decisions.
 

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 and have negotiated a discount for CareSuper members.

If you have decided to close 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.

Your Findex specialist will work with you through the entire process ensuring all of the paperwork and tax requirements are taken care of. You’ll receive guidance, checklists and help when carrying out the tasks to wind up your SMSF. Follow the link to find more information on Findex and their relationship with CareSuper.