Those of you who know what SMSF is can skip right to the next paragraph, those who do not, keep reading. Basically an SMSF or self-managed superannuation fund, is a way for you to save for retirement (it gives you more control when it comes to your retirement planning). This, of course, isn’t a very black and white process, so understanding what it is, what it takes to set up such fund, the rules and regulations, SMSF administration, what you should look for, etc., is very important.
The main difference between other types of funds and an SMSF is that all the members of a SMSF are also the trustees of the fund. The way this kind of superfund works is that each member can run the SMSF but only if in the way that benefits each member. You need to weight the advantages and disadvantages, consider a wide range of factors, and remember that this kind of superfund may not be for everyone. You must have some skill before diving in and self managing your retirement. It may be a lot more work than you may originally have thought.
Take the SMSF audit for example. It is required at the end of the year, but it involves a lot of SMSF administration and must be done by an approved auditor. In order for the auditor to be approved they must have a valid license and must have the right knowledge to be able to carry out this task. There are two main types of audits that occur – the financial audit which allows auditors to have a closer look at the fund’s financial statement, and the compliance audit which is an assessment of your fund’s compliance with the superannuation rules and guidelines. It is a requirement to have your superfund audited, hence it is good to know as much as you can.
Another concern that arises when you decide to set up a self-managed superannuation fund is that you might not know which SMSF administration service provider is right for you. After all, they all handle the fund, so it’s good to know your options. While there are many cheaper providers, their professionalism is questionable. You should always do your research and make sure to look into all the service providers you are considering signing up with. Your pension should be taken seriously so when it comes to choosing a provider you should carefully evaluate their reliability before entrusting them with your future.
Choosing the right SMSF service provider can be of crucial importance if let’s say, you are an Australian citizen who wants to open an SMSF, but you are living overseas. The most basic rules are that the SMSF must be established in Australia. The management and control of your superfund must be conducted in Australia, and the contributions which are made to the SMSF regarding the member that is overseas. You should consider learning more about SMSF residency rules if it is something that might apply to you.
SMSF may not be the easiest option to choose when it comes to your retirement fund, but it is one that more and more Australians are choosing, simply because most people are unhappy with the way their fund is being handled now so they choose to do it themselves. You have more control and can see everything that is going in and out of your superfund. If you are interested in learning more, do your research; there is plenty of information available to you online as well as many organizations and offices that can assist and guide you through the whole process.
