With changes to super on the way, you may be considering a self managed super fund (SMSF) as a way to gain more flexibility and control over your retirement savings. And given that the 1 July super changes are complex and difficult to implement, it’s no surprise that many Australians are turning to the SMSF experts for guidance.
How does an SMSF provide more control?
One of the biggest advantages of an SMSF is the control you have over the decisions made for your fund, including your investment strategy. You are also responsible for managing the administration and compliance requirements, but from time-to-time, you may need to seek advice from accountants, lawyers or financial planners.
While having an SMSF means that you have more responsibility for your super, it doesn’t mean you have to take all the work on yourself, especially if you partner with an SMSF support service, which allows you to retain control of the decision-making, with the benefit of direct access to strategic advice from a team of experts and support managing the day-to-day running of the fund.
What flexibility does an SMSF offer?
Many people who choose an SMSF value the flexibility they have to tailor their investment strategy as well as structure their super to suit their personal circumstances.
In our view, one clear advantage of an SMSF is the ability to respond quickly to opportunities generated by changes in legislation. For example, when transition-to-retirement pensions were introduced in 2005, some of our SMSF clients were able to make use of the provision the following day. Because the trustees and members of an SMSF are one and the same, they are able to make decisions quickly.
You may also be able to more easily redistribute money between accounts in an SMSF. For example, from 1 July 2017, anyone who has more than $1.6 million in a super pension account will need to consider moving the excess into an accumulation account or withdrawing it completely. SMSFs will generally allow you to make this change in a timely and cost-effective manner, meaning you may not be forced to sell assets, establish a separate account or incur additional fees.
What’s best for you?
While an SMSF can be a great way to manage your retirement savings, it’s certainly not right for everyone. There are a number things you need to consider before setting one up, find out more.
Pre-1 July considerations for those thinking about an SMSF
- Assess the benefit of bringing forward planned contributions to this financial year in order to make the most of the current contribution limits.
- Consider a spouse redistribution strategy if you’re thinking of setting up an SMSF. This is particularly important if you’ve got more than $1.6 million in super, as redistributing funds to your spouse could help you stay below the cap.
- With media attention focused on legislation, it’s easy to neglect your investment strategy. Given that global markets are unstable, it may benefit you to think outside the box when it comes to asset selection and consider alternatives to traditional cash and shares.
- There are a number of decisions that you may need to make in preparation for the 1 July super changes for which you may require additional expertise. With the support of a super expert, you should find it easier to navigate the complexities and implement the changes.
Ongoing market fluctuations and legislative reforms can impact anyone no matter how they choose to invest in super. However, the type of super fund you’re in may influence how easily you can adapt to change. The closer you are to retirement, and the more money you have in super, the greater the potential impact of these changes. If you’re thinking about your own SMSF, make sure you consider a supported service.