SMSFs are one of the fastest growing sectors of the superannuation industry. The Australian government wants to ensure funds are managed properly in order to accumulate retirement benefits for members thereby reducing future reliance on government pensions.
Anyone who advises on SMSFs must hold an Australian Financial Services Licence and be qualified in advising superannuation trustees and fund members.
The trustee’s role
As a trustee you are solely responsible for the day-to-day operation of your fund. You can seek professional advice – for example, on administration, taxation, investing, legal, actuarial and audit matters – but if you break the superannuation rules, the “buck stops with you”, the trustee.
Getting it wrong whether by accident or carelessness can have serious ramifications.
It can mean loss of concessional tax status for your fund, fines, or civil and even criminal penalties for the trustee. It could even mean you are banned from acting as director of a company.
Increase your retirement benefits
A properly planned and operated fund should significantly increase retirement benefits. As an example, superannuation regulations require all super funds to have a written investment strategy. This will set out what the fund is trying to achieve, taking into account the circumstances of the members and any employer contributor. Typically, it will provide a benchmark asset allocation setting out the types of assets the fund will invest in to achieve its goals.
A long-term strategy is impractical unless it is monitored and reviewed regularly and this is a requirement for all SMSFs.
Although this might seem like an extra impost, the upside of regular reviews of your fund strategy is that you potentially achieve superior results from your investments.
Do it right
Sadly, many individuals and businesses have been encouraged to set up and run SMSFs for the wrong reasons, attracted by the promise of low fees. As is often the case, “you get what you pay for” and poor advice can mean trouble with the regulator and an under-performing super fund. Do it right and do it well and you will be the one who wins in the end.