Switching super to a SMSF

What do you need to know if you’re considering a SMSF

Switching super to a SMSF

YOURLifeChoices member Anne is considering switching to a self managed super fund, but isn’t too sure if she’s left it too late. Craig Hall from NICRI points her in the right direction.

Q. Anne
I’m 55 and have approximately $350,000 in my superannuation fund. Would it be beneficial for me to switch to a self managed super fund (SMSF) and be more in control of where my money is invested? Or is it too late?

A. Provided by Craig Hall, NICRI
The growth SMSFs over recent times indicates that superannuation members are looking to take more control over their benefits and believe that they can produce better results more cost effectively.

The annual cost of running a SMSF can start from as little as $700. This is around 0.2 per cent per annum of your current balance ($350,000) and compares favourably to a managed super fund, which can range from 0.5 per cent to 2.0 per cent. However there are cases where the annual costs have been in excess of $8000, which equates to approximately 2.3 per cent per annum.

So what about considering a SMSF at age 55? Well it’s not too late, as superannuation is a lifetime investment and even if you decide to draw down your superannuation as an income stream, it still requires management. It may be later in life when you do not wish to have the legal responsibilities of being a trustee, to put in the time and effort to run a SMSF and/or the balance has reduced to a point where it is no longer cost effective, that a SMSF is no longer appropriate. In this instance it can be rolled back to a complying public superannuation fund.

There are number of issues to consider when managing your superannuation which apply to SMSFs. To find out your legal responsibilities and what is involved with running a SMSF contact the Australian Taxation Office on 131020 and obtain a copy of the publication Running a self-managed super fund - Your role and responsibilities as a trustee. Alternatively, download a PDF copy

 If you require further information on financial matters that may concern senior Australians please contact NICRI toll free on 1800 020110, email nicri@nicri.org.au or write to PO Box 1339, Fyshwick ACT 2609. Our information leaflets are also available on our websites www.nicri.org.au © and http://moneymap.nicri.org.au.



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    COMMENTS

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    Shorty
    12th Apr 2013
    6:03pm
    Anne should consider a Superannuation Wrap or Industry Fund Self Directed option at the same time as a SMSF. Each of these give you similar levels of overall control. All offer the ability to buy Direct Shares, ETFs, Term Deposits, Managed Funds and Cash. However if you want Direct Residential or Commercial property then you need an SMSF. If property is not a problem then one of the other options would most likely be the cheaper option for her. Anne could consider one of those options as a stepping stone to a SMSF. I coach people on SMSF and Non-SMSF options and find about 30% opt for SMSF up front.
    Giles
    13th Apr 2013
    7:23am
    $700? That, surely, is totally unrealistic.
    Shorty
    13th Apr 2013
    3:25pm
    It cost about $713 just for the Corporate Trustee company. Any service telling you to use Individual Trustees is doing you wrong! Read this article for the reasons why http://thesmsfcoach.com.au/2012/12/19/why-self-managed-super-funds-should-have-a-corporate-trustee/