How to Control Your Superannuation
Most people want to take control of their superannuation. There are a few things you can do for making the most of your super.
Minimise your super fees
The first thing you can do is look at minimising your super fees. It is estimated that 20% of Australian’s pay more than $1000 a year in super fees. You can consider opening a low fee fund and consolidate all of your funds into one super account.
Consolidate your super
If you have had multiple jobs in your lifetime, it means you may have more than one super account. If this is the case, you may be paying additional fees and charges on each account. You should locate any of your lost super and consolidate it into one account which will minimise the fees you pay.
What is a SMSF?
Another option that can allow you to control your superannuation is to have a self-managed superannuation fund. A SMSF is a superannuation trust structure that is controlled and managed by members of the fund. It differs from other trust funds as members are also the trustees of the fund.
Why choose a SMSF?
A self-managed superannuation fund allows for many benefits, such as; more control, low tax, low fees, asset protection, retirement income control, and the ability to pool together family member’s superannuation. Setting up an SMSF can give you control over where and how your super money is invested.
Generally, you need a considerable amount of super to validate the expenses of an SMSF. Managing your own super also involves a lot of time and effort, and a larger amount of responsibility. SMSF’s are usually best suited to those who have a lot of super and extensive knowledge of financial and legal matters.
How much do I need to make a SMSF?
The ATO and ASIC claim that a having a balance of about $200,000 is a good foundation to start an SMSF.and practically it is generally better to be closer to $500,000.
Things to consider before setting up a SMSF
- A SMSF can only have a maximum of four members which are either individual trustees or directors of a corporate trustee of the fund.
- Trustees need to consider whether to have insurance for their members.
- SMSF’s are regulated by the ATO
- Trustees need to comply with and understand tax and superannuation laws
- Any disputes must be resolved at the member’s own expense as there is no government compensation scheme
- An exit strategy should be in place in case you face any unexpected events such as a relationship breakdown between trustees or a trustee dying