When It Comes to Your Superannuation, Should You Self Manage?

When It Comes to Your Superannuation, Should You Self Manage?

20 October 2017
 Categories: , Blog

Are you the type of person who likes to be in control all the time? If so, you may not be happy with your current financial situation and want to take more control over its future. If you're in this situation, you should think about setting up a self-managed superannuation fund, so you can plan well for your retirement. However, this is not quite as straightforward as it may seem, so what do you need to be thinking about before you go ahead?

Is This for You?

Firstly, you need to be quite serious about your plans and your wish to control all of these details, as the government requires you to contribute quite significantly to this superannuation fund in the relatively near future. Otherwise, you may not be able to justify the costs linked to this approach.

Key Considerations

Do you have a sufficient amount of resources and the spare time to become a trustee of your own superannuation fund? This is not to be underestimated as there are a number of tasks required on a regular basis and you need to monitor the markets so that you understand the investment strategies open to you. The government requires you to lodge a number of reports and you will need to meet the necessary deadlines, or you can risk the entire project.

Superannuation laws in Australia are quite complex and you will need to know what's involved. You'll also need to be able to change direction and adapt your plans if needed, due to developments in the marketplace.

Sole Purpose

Before you can go ahead, you will need to pass what is called a "sole purpose test." Essentially, you need to confirm that all of the assets and the entire fund will be used only for certain benefits during your retirement. It is possible for you to bequeath all of those benefits to your dependents, however, or enable them to manage the fund should you become unable to do so yourself for health reasons.

Personal Eligibility

You will also need to be eligible before you can become a trustee of your own self-managed superannuation fund. If you've had problems with bankruptcy in the past this may rule you out, or if you've being charged and found guilty of a serious criminal offence, then you may need to consider a different course of action.

Funds Eligibility

Your funds have to be established in Australia and you (or the other trustees) have to live in the country, as well. There may be other rules related to residency when it comes to those who hold the assets linked to the fund.

Getting Further Advice

If you're unsure whether this is the right approach for you based on all of these factors, you should get in touch with an accountant who specialises in this area.