Super funds
What is a self-managed super fund used for?
A self-managed superannuation fund (SMSF) is a super fund that is independently established and run. It is different from the standard industry or retail funds as it tends to offer members greater control over their retirement savings. SMSFs often allow for wider investment choice and can give members the ability to pay retirement benefits, such as pensions, directly from the fund.
Requirements for a self-managed super fund
Self managed super funds must be established for the sole purpose of providing benefits to fund members on retirement (or, if the member dies before retirement, a benefit to that member’s dependants). This is referred to as the Sole Purpose Test.
An SMSF can have between one to four members. Each member is a trustee (or director if there is a corporate trustee). Legal responsibility for running the fund and complying with legal requirements falls on the member as trustee.
Running your own fund is complex. When you run your own SMSF you must:
- carry out the role of trustee or director, which imposes important legal duties on you
- use the money only to provide retirement benefits
- set and follow an investment strategy that ensures the fund is likely to meet your retirement needs, and
- keep comprehensive records and arrange an annual audit by an approved SMSF auditor.
For funds with two to four members:
- Individual trustees: All members must be trustees and all trustees must be members. There is no need for the members to be related unless one of the members is the employer of another member.
- Corporate trustee: All members of the fund must be a director of the corporate trustee and all directors of the corporate trustee must be members of the fund. There is no need for the members to be related unless one of the members is the employer of another member.
For funds with only one member:
- Individual trustees: The sole member must be one of two trustees. The other trustee can be any person but cannot be the employer of the sole member unless that second trustee is related to the sole member.
Corporate trustee: The sole member of the fund must be the sole director of the corporate trustee or must be one of two directors of the corporate trustee. The second director can be any person but cannot be the employer of the sole member unless that second director is related to the sole member.