A Self-Managed Superannuation Fund (SMSF) can be described as a do-it-yourself super fund for anywhere between one and four members where each of the members is designated as a trustee of the fund.

All in all, every trustee must be a member and every member must be a trustee. A single member fund will require two individuals as trustees or one company as a corporate trustee.

A SMSF is significantly different to a retail or industry superfund which in comparison is pooled with other members super and is professionally managed by those who are designated as trustees of the fund.

Ever since the Global Financial Crisis (GF) in 2008, there has been an ongoing rise in the number of people who lack confidence in super fund managers. This means that the popularity of SMSF’s have continued to rise over the past decade and a half. Another reason for the rising popularity of SMSF’s is that more people are wishing to be in control of their financial destiny.

The popularity of self-managed super funds has continued to rise since the global financial crisis (GFC) in 2008. The increasing lack of confidence in super fund managers in combination with the desire of wanting to be in control your own financial destiny has resulted in a huge rise in the number of Australians deciding to manage their own super funds.    

There are plenty of benefits associated with establishing a SMSF these include; you are the boss of your super fund and therefore you will have control over how the funds are invested. SMSF’s also have reduced tax rate and offer plenty of advantages in relation to asset protection.

SMSF’s also provide increased flexibility and make it easier to manage the contribution levels and methods. You also have control over the types and different level of insurance that is held within the super fund.

SMSF’s also offer more flexibility of investment types and give you a huge amount of control over your death benefits and retirement benefits. You are also held personally responsible for the performance of your investment.

Despite there being a large number of advantages associated with SMSF’s you should also be aware that it is a huge responsibility to take on and requires a large amount of planning and is a big investment of your time.

The Australian Government also has strict rules outlining what a person can do with their SMSF and how you are able to invest the funds and when you are eligible to access them. By starting an SMSF it is your own responsibility to maintain records and to regularly report to the Australian Tax Office (ATO).

At the present time SMSF’s are the fastest and largest segment of Australia’s rapidly growing superannuation industry. As of 2022 the SMSF industry is three times bigger than it was five years ago.   

A key factor that is leading to the growth of self-managed super funds is the fact that they are generally low cost.  SMSF are an attractive option for many Australian’s who are wanting to obtain more control over their retirement outcomes.

A report published in 2022 has shown that there is also a rise in the number of younger Australians who are deciding to set up an SMSF. The data complied show that the age group between 25 and 44 are the most popular age group to start a SMSF.

These findings show that the younger generation are wanting to make their own investment related decisions. There was a total of 12,413 net establishments recorded during the 2021 financial year. This is a huge increase when taking into consideration that only 233 were recorded during the 2018 financial year.

The average age for the establishment of an SMSF has dropped from 51 years between 2006 and 2014 and now currently sits at 46 years of age between the years of 2020 and 2022.

Want to know more? Here is our eBook featuring our guide to SMSF’s.