The 1 Million Milestone for Super

With more than a 26 per cent growth in four years and more than $560 billion dollars in assets, the Self-Managed Super Fund (SMSF) industry has hit an incredible milestone – 1 million members.

With an average balance of more than $543,000 per member, the growth of SMSF’s has continued with another 6374 net establishments for the March quarter, taking the total number of SMSF’s to 528,701 and total members to 1,006,975 in Australia.

With another $466 million rolled out of other funds and finding its way to SMSF’s, there seems to be a continued strength by members to take control of their retirement savings.

So who are these members and are all SMSF members rich?  Let’s look at the statistics.

For new funds established during the quarter, more than 80 per cent of members were over the age of 45, which also means that 1 in 5 were under this age with 1 in 20 being under the age of 35.

While the majority of SMSF members are male, as a proportion of their individual gender statistics, women dominate the 35-64-year-old age bracket, with men dominating the over-64 age bracket.

The majority of SMSF members have taxable incomes of less than $60,000 and just under half of SMSF funds have less than $500,000 in investments.

A further quarter of all funds have between $500,000 and $1,000,000 in investments with a similar amount being between $1,000,000 and $5,000,000.  Only 2 per cent of all funds have more than $5 million in investments.

Across the country, New South Wales leads the way, representing 36 per cent of all SMSF establishments for the quarter.  Victoria follows closely with 31.4 per cent, while Queensland had nearly 17 per cent.  Western Australia represented only 6.7 per cent of new establishments.

So while the typical SMSF member is hard to stereotype, here are just a few points to consider if you have been thinking about setting up your own fund.

Setting up a fund

When you establish a SMSF, you become a trustee of the fund. This means that you will be the controller and you will be responsible for managing the fund in accordance with its trust deed and the relevant rules.

Investments

As trustees, you will need to manage and monitor your fund’s investments, taking into consideration the profile of all members of the fund. All SMSF investments must be separate from the personal bank accounts and investments of its members.  All investments must be in the correct name of your super fund.

Contributions and payments

As the controller, you can accept contributions for your members depending on the member’s age and the contribution caps. When paying benefits, a member must reach his or her preservation age and a condition of release, such as retirement, before you pay the benefits out. Hefty fines apply for paying out super benefits early.

Keeping records

As a trustee, there are a number of administrative roles such as organising the preparation of tax returns, your annual audit of your fund, recording minutes and keeping the Australian Taxation Office up to date with any changes.  Accurate record keeping is essential.

SMSFs are not for everyone and you should seek professional advice to determine whether it is right for you.  While some trustees go it alone, you need to have the time and skills to do it and breaching the rules can mean that you lose tax concessions and be heavily penalised.

Partnering with a professional adviser will help you determine the best investment strategy for your circumstances, monitor the compliance and guide you with what is and isn’t allowed under the legislation. Remember, your super funds should be managed professionally, so seek the advice of a financial adviser who has the skills and experience in this specialised area to ensure your retirement is a long one.

Olivia Maragna is the co-founder of Aspire Retire Financial Services and is a respected and independent financial expert.  Olivia’s advice is general in nature and readers should seek their own professional advice before making any financial decisions.

Send your finance questions to Olivia at scoop@brisbanetimes.com.au.

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Read more: http://www.brisbanetimes.com.au/queensland/blogs/good-finance-advice

Olivia Maragna