Why do people choose SMSFs? This is a question you're likely to ask yourself when weighing up options for your retirement savings, so we thought we'd provide insight into why SMSFs are better than traditional superannuation funds for some people.
SMSFs – or self-managed super funds – comprise approximately 99.5 per cent of all funds and hold 29 per cent of the $2 trillion in total nationwide superannuation assets, according to the Australian Taxation Office.
The superannuation industry collected approximately $31 billion in fees last year.
Here are three reasons why an SMSF might be the better option for you:
1. More control over your super
SMSFs provide you with greater control over your retirement planning by allowing you to choose where and when you invest your hard-earned savings. However, having more power is a double-edged sword, as you will also be responsible for complying with the necessary superannuation and tax laws.
Is running an SMSF difficult? There are challenges associated with setting up and managing these funds, which is why Geelong accountants like WMC Accounting have specialist SMSF advisory services to assist clients with their specific needs.
2. Lower fees
The superannuation industry collected approximately $31 billion in fees last year, figures from Industry Super Australia revealed in May. But SMSFs only receive 7 per cent of this total, despite possessing nearly one-third of funds under management and having 10 per cent of all super members.
— ato.gov.au (@ato_gov_au) May 26, 2017
You should be aware that SMSF costs typically include a set-up fee and annual running expenses. These figures will vary depending on the size of the SMSF and the amount of assistance you require in establishing and maintaining the fund.
3. Tax minimisation and flexibility
Most super funds have tax-related benefits, but one of the key reasons why SMSFs are better in this area is that members have full control over the timing of contributions and the allocation of earnings to people within the fund.
SMSF members can therefore take advantage of tax minimisation strategies to maximise the amount of money available to them in retirement. However, SMSF tax rules are complex, so seeking professional accounting services is recommended to ensure you stay within the regulatory boundaries.
Would you like to know more about SMSFs?
This article should give you a good idea of why people choose SMSFs over other types of superannuation fund.
Nevertheless, you should contact a licensed accountant for tailored advice regarding the costs and benefits of setting up an SMSF.
Please get in touch with a member of our team at WMC Accounting to see whether SMSFs are better for your retirement plans.
WMC Holdings Pty Ltd t/as WMC Accounting is a Corporate Authorised Representative No. 124 5401 of SMSF Advisers Network Pty Ltd ABN 64 155 907 671 AFSL No. 430062 www.smsfadvisersnetwork.com.au.
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*Other than for the acts or omissions of financial services licences.