There are a few advantages Self Managed Super Funds have over retail superannuation funds.
These are as follows:
The primary motivation for members in setting up an SMSF is generally the desire for investment control. The requirement that all members must be trustees of the fund means the control of the fund is shared between the members of the fund.
This allows members of an SMSF to select specific investments and potentially tailor their own investment strategies. The investor has a high degree of control over the investment portfolio, which may include:
- Direct investments (e.g. shares, property)
- Managed Funds (retail or wholesale)
- Unusual or exotic assets (e.g. artwork, collectables)
- Pooled superannuation trusts; or
- Investment choice i.e. a choice between investment strategies, rather than specific assets.
In contrast, retail fund members have little control over specific assets, only broad asset categories.
The investment strategy of an SMSF can be changed from time to time to suit changing circumstances and to take advantage of any current investment opportunities.
CA Financial Services provides a full written investment strategy along with advice regarding the structure, strategy and solutions for you new or existing SMSF. Contact CA
Potential cost savings
Investors running their own SMSF may pay less fees compared to retail superannuation fund members.
Retail, Corporate and Industry funds generally pay a percentage based fee.
In contrast, the costs associated with running an SMSF are generally dollar based.
For some investors, their investment objectives are cost driven. This type of investor is likely to regard SMSFs as a vehicle to control the costs incurred by the fund. However, the potential cost savings alone should not be the only reason for establishing an SMSF.
In summary, individuals with investment experience who have substantial superannuation assets may benefit most from establishing and managing their own SMSF because:
- The flat dollar establishment and recurrent costs of an SMSF usually form an ever diminishing proportion of total fund expenses as the value of the fund increases; and
- The compounding effect of cost savings reinvested by a fund can increase the amount of superannuation assets accumulated over the medium to long-term.
CA Financial Services can determine if there would be any cost savings for you. Contact CA
For many retail fund members, it can be difficult to obtain up to date and specific investment information regarding the assets of the fund. The investment information is usually more related to broad categories of assets (such as shares and property) rather than the specific assets (e.g. BHP shares). In contrast, the trustees of an SMSF can select and invest in specific assets in accordance with the fund’s investment strategy.
CA Financial Services provides you with access to wrap platforms, direct equity access, SMA (Separately Managed Accounts) to the the traditional managed fund. Contact CA
SMSFs are a flexible and adaptable retirement savings structure, which can be tailored to suit the specific needs of all its members. It can also be designed to last many lifetimes and future generations.
An SMSF can receive contributions, either in the form of money or assets, as well as roll-overs. It also allows members to pool their funds together opening up more investment options.
The trust deed can also be designed to facilitate all strategic options, which can potentially cover the retirement and estate planning needs of a whole family, not just one member.
The trustees of the fund have a wide range of investment options. For example, it is possible to transfer personal assets (such as listed shares) into an SMSF as a non concessional contribution, a tax-deductible in-specie contribution (provided the member is eligible for a taxation deduction), or alternatively, the fund could purchase the asset with its own money.
The fund could also own real property from which a member’s (or other entity’s) business is conducted under an arm’s length lease arrangement.
Trustees also have a certain degree of control over the rules of the fund and how it operates, since the member will be an individual trustee or trustee director. This allows greater flexibility over the overall management and administration of the fund.
For example, the fund may grant the trustee(s) discretionary powers regarding:
- the way in which benefits are paid out of the fund;
- the method in which earnings and expenses are apportioned among members (although SIS requires all allocations to be on a fair and reasonable basis); and
- the allocation of reserves (if any).
Contact CA Financial Services to determine what investment platform or method of investing is right for you. Contact CA
High net worth investors may be more attracted to SMSFs than retail superannuation funds, due to their ability to deliver a broad range of taxation and estate planning strategies. These benefits include:
- the ability to significantly reduce tax on contributions and earnings via the effective use of imputation credits;
- the flexibility to utilise existing reserves of an SMSF for a variety of purposes;
- the ability of small business owners to link the tax concessions of superannuation with their business and family objectives;
- the ability to make in-specie contributions, transfers and payments;
- access to a CGT exemption in converting assets from the accumulation phase of superannuation, to the pension payment phase;
- the SMSF trustee may have the flexibility/discretion over the form and manner in which benefits can be paid.
Whilst a retail superannuation fund may provide some of these benefits, it is unlikely they could provide all these options, whereas an SMSF could be designed to accommodate all of these strategies.
Contact CA Financial Services and find out what strategy will suit you best. Contact CA
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