Self-managed super funds (SMSFs) are a great way of to save money for retirement. They differ from other super funds in the fact that members are also the trustees of the fund.
Advantages of self-managed super funds
The main advantage lies in the level of control trustees wield over the fund to meet their specific needs. In this regard it differs from retail and industry super funds, which are designed to benefit a large number of members, and whose decisions have to be based on the group’s collective interests rather than what is best for an individual member.
A SMSF is established for the sole purpose of providing financial benefits to members in retirement, and are run strictly for the purpose of providing retirement benefits for the members or their dependents. An SMSF will have its own Tax File Number (TFN), Australian Business Number (ABN) and bank account. All of which allow it to receive contributions and rollovers, make investments and pay out pensions.
Setting up an SMSF
Setting up an SMSF is typically a major financial decision due to the time and skills required to manage it – its members have to make the investment decisions for the fund and are responsible for complying with applicable super and tax laws. For this reason, it’s best to see a qualified and licensed professional to help you decide if a SMSF are for you or not.