All superannuation funds aim to provide retirement benefits, but there are key differences between Self-Managed Super Funds (SMSFs) and other super funds. If you're thinking about starting an SMSF, it’s important to compare it with other options before deciding. Here are the main differences:
| Members and Trustees | An SMSF can have up to six members. All members must also act as trustees or directors of a corporate trustee, which means they are all involved in managing the fund. | Usually, there's no limit on the number of members, and professional, licensed trustees manage the fund. |
| Responsibility | Trustees need to know tax and super laws and must ensure the fund follows these laws. If the fund doesn’t comply, the trustees or directors could face fines. | Professional trustees take care of compliance, so the responsibility isn’t on individual members. |
| Investments | Trustees or members decide on the fund's investment strategy and choose the investments themselves. Having control and more flexibility in the choice of assets are the main key benefits. | Members can choose the type of investments and risk level, but they don’t pick specific assets. |
| Insurance | Trustees must think about whether to provide insurance for members. Insurance costs might be higher than in other super funds but the coverage is of higher quality. | Insurance is usually offered at a lower cost because large funds can negotiate discounted rates. |
| Regulation | SMSFs are regulated by the Australian Taxation Office (ATO), and trustees must interact with the ATO to manage the fund. | These funds are regulated by the Australian Prudential Regulation Authority (APRA), and members usually have minimal involvement. |
| Complaints/Disputes | The ATO doesn’t manage disputes between SMSF members. Members need to resolve issues through other methods, like dispute resolution services or court, and there’s no government-backed compensation if things go wrong. | Members can file complaints with the Australian Financial Complaints Authority (AFCA) and might be eligible for compensation. |
If you're considering setting up an SMSF, take the time to compare your options carefully. Understanding the differences between SMSFs and
other super funds can help you make an informed decision that best suits your financial goals and retirement plans. Speak with a financial
adviser today to begin securing your financial future.
