Self Managed Superannuation – With Greater Control Comes Greater Risk

Danni Kirwan, Marketing Executive

The poor performance of retail super funds since the start of the GFC has seen many investors make the move to Self Managed Superannuation Funds (SMSF’s).

Statistics released by APRA show that as of June this year, there were approximately 410,000 SMSF’s in Australia – an increase of 27,000 on the previous year alone. Over the same period, SMSF assets increased by $2bn while assets in retail super funds dropped by 9% to $306bn.

While many investors make the move to an SMSF to gain greater control over how their money is invested and managed, it is vital that they realise that this also translates into a greater risk to their investment.

Here are some things that you should consider when deciding whether an SMSF is right for you:


Your responsibilities as an SMSF Trustee

First and foremost, as the trustee of an SMSF it’s your responsibility to ensure that the money of the fund is invested appropriately. Being the trustee of an SMSF carries a number of responsibilities – so if your fund has more than one trustee make sure that the others are people that you can trust. A Self Managed Super Fund won’t be able to claim compensation under superannuation law if fraud or theft occurs within the fund.

As a trustee, it’s also your responsibility to ensure that your fund is administered properly. Although Cleardocs offers you a legally sound and cost effective way to establish your fund, there is ongoing work required to ensure that your fund remains compliant in the ATO’s eyes. If your fund is deemed to be non-complying by the ATO, then you could end up losing up to 40% of your superannuation assets. Even if you seek professional advice, as a trustee you are still responsible for any mistakes made in the management of your fund.

If you do decide to get professional assistance in devising your investment strategy, or administering your fund, then make sure that your adviser is licensed to give you investment advice. This requires them to be “RG146 compliant”. RG146 refers to the minimum training requirements put in place by ASIC for anyone who provides financial product advice.


Where to find out more

Although operating your own SMSF can be complex at times, it’s also a great way to maintain control over your own money – and in turn, your retirement. Careful planning and management of your fund will help to ensure that your fund remains compliant – a key factor in this regard is ensuring that you stay abreast of changes in superannuation law.

On the Cleardocs website you will find a wealth of ClearLaw articles written by our lawyers at Maddocks focusing on issues relating to SMSF’s. You can also update your SMSF deed with Cleardocs for just $99 – ensuring your deed complies with the most recent law.

You can also find information and helpful tips for SMSF trustees on ASIC’s “FIDO” website, here.