What You Need to Know Before Starting an SMSF

Are you one of the many Australians who are looking beyond industry and retail superannuation funds for a better long-term outcome regarding your retirement savings? Then you may be interested in starting your own self-managed superannuation fund (SMSF).

You probably already know that superannuation is an excellent vehicle for saving for retirement. It offers generous tax incentives to encourage people to think ahead, rather than relying on the aged pension. Establishing your own fund means making your own investment decisions, and while this may not sound attractive to some people, many Australians are already managing their own SMSFs.

Setting up the Fund

To set up an SMSF, there must be a valid trust deed executed under law and a trustee declaration indicating that you understand your duties and responsibilities. The SMSF must be registered through the Australian Business Register and elect to be regulated by the ATO. This is just the beginning.

It is in this setting up stage that a lack of knowledge or a bad decision could cause the fund trustees unnecessary problems further down the track. It is, therefore, very important that you seek professional advice before you start. This is the only way you can be certain that the set-up process is correct for your needs and will serve your purpose.

As mentioned earlier, getting the administration right is critical to the success of the fund. Just to give you a better indication of what is involved, consider how you will maintain the investment register, advise on changes to members and trustees, administer pensions and rollovers, prepare regulatory returns and provide investment returns with accounts.

Luckily, help with this is available as there are many companies like Carbon Group that provide SMSF administration services. They assist with establishing the fund and the ongoing administration and compliance, leaving you to contemplate how to grow the fund assets.

Growing the Fund

If you have members who have been working for many years they will already have accumulated significant funds in their industry or retail superannuation funds. When these funds are rolled over into the SMSF, you will be responsible for these assets, their rate of growth and security. Even in a fledgling fund, you could be holding hundreds of thousands of dollars in cash or other assets.

If the prospect of making investment decisions for these assets is suddenly daunting, there is also professional help available in terms of investment management and financial planning. You are not alone, as their role is to help you grow your fund with a strategic focus on providing for a comfortable retirement.

Of course, if you have the time and skills, you can still go-it-alone, but with all this assistance available to you, why would you take the risk and possibly jeopardise your retirement plans and those of your members?