Whether you are in your first job after leaving school or only a few years from retirement, it pays to understand how superannuation works. By the time you are ready to retire, your superannuation could have grown to be one of the largest assets you will have in your life. This is your investment in your future. It’s important to understand why you need it, what you’re entitled to, how you can contribute and how you can best manage the money for your retirement. The government provides generous tax incentives to encourage Australians to invest in super.

Superannuation is an investment designed to provide money for your retirement. Most people start a superannuation account when they start work because their employer has to pay contributions. You benefit from saving regularly over many years, your superannuation fund makes the savings work for you by investing them, and your money is generally taxed more lightly than other forms of investment.

GBA Financial Services can provide advice as to which Superannuation policy is most suited for you, as well as prepare a tailored portfolio based on your needs, objectives and risk profile.

Speak to GBA Financial Services to find out how you can maximise your Superannuation.

SMSFs are often referred to as do-it-yourself super funds because although they work in a similar way to other super funds, by providing benefits to members on retirement or on death. Each member is also a trustee of the fund, and is personally responsible for managing the fund, for making investment decisions and for complying with the law.

Because of the responsibilities and obligations placed on trustees, the number of rules and regulations (and the consequences to members of breaching them), and the additional administrative costs associated with establishing and maintaining a SMSF, they are not suitable for every client.

General advantages of using a SMSF could include:

  • Greater investment options (including access to direct investments)
  • Direct control over type and timing of investments
  • Potentially more cost-effective on larger balances (eg, over $200,000), as the costs are often fixed dollar amounts, compared with managed funds charging fees as a percentage of funds under management.
  • Flexible benefit payment options (control over managing and paying account-based pensions or commutations to lump sums, assuming these options are provided for by the terms of the trust deed)
  • Flexibility to meet other specific needs and objectives such as specific investment preferences (the client should ensure the trust deed and investment strategy are tailored to suit the members of the fund)
  • Ability (if allowed by the trust deed) to adopt either a single pooled investment strategy for the whole of the fund and its members, or separate investment strategies for different parts of the fund including individual members or any assets supporting a pension for particular members
  • Tax management benefits
  • Estate planning benefits
  • Insurance benefits

General disadvantages of using a SMSF could include:

  • Time, energy, knowledge and skills required to manage the fund, in terms of administration (including accounting/tax, audit and legal) and investment (typically, while trustees will obtain expert assistance with administration and investment, the trustee still bears ultimate responsibility for properly managing the fund)
  • Detailed tax and regulatory compliance obligations
  • May lack scale to fully diversify investments or to invest directly in some assets
  • Administration costs may be cheaper in public-offer super funds (especially not-for-profit funds) Managed funds with large amounts to invest may have access to investments at wholesale or discounted rates
  • Failure to comply with regulatory requirements may result in the fund losing its complying status for serious breaches (with tax being levied at 45%, instead of 15%)
  • A trustee of a SMSF doesn’t have the same protections as a member of an APRA-regulated superannuation fund

If you are interested in find out more about a Self Managed Superannuation Fund, or to discuss if it is suitable for you, please contact GBA Financial Services.