Today more and more people want to have control over their retirement plan. If you are one of them, then there is a great option for you to manage all of your savings for retirement – setting up your own Self Managed Super Fund. The SMSF is a huge trend in Australia – it is a superannuation trust structure that provides financial remuneration to its members once they retire. One of the most interesting things about it is that its members are also the trustees of the fund. So, even if you do hire a professional SMSF advisor, at the end of the day you are still the one responsible for the decisions that you make related to it.
If you want to set up your own SMSF you need to meet the sole purpose test. This test will ensure your fund is maintained for one purpose only – to provide benefits to your dependent in case of death before retirement, or to provide you (as a member) with benefits when you retire. The Self Managed Super Fund must maintain at least one core and one ancillary purpose.
- Paying benefits to the legal representative or dependent in case of death before retirement
- Paying benefits when a member reaches a certain age
- Paying benefits when a member retires from employment
- Cessation of employment in case of bad physical or mental health
- Termination of the member’s employment with an employer who has made contributions to the fund for that member
- Death of the member after retirement where the benefits are paid to the member’s legal representative or dependent
- Other purposes approved by the APRA ( Australian prudential Regulation Authority)
The self managed super fund is a game of numbers and looking at the SMSF statistics trends can give an interesting overview on how people in Australia choose to save for their retirement. Speaking of statistic, the only credible numbers are those released by ATO. ATO SMSF statistics are released four times a year and the recent numbers of these statistics show that the SMSF is still in growth. Let’s see how much this part of the industry in changing and growing with time.
- According to the latest statistics released at the end of the March this year, the total superannuation assets are $2.0 trillion, out of which $600 billion are in self managed funds.
- In the recent five years, the number of self managed super funds in Australia grew by 27%. This means today there are about 557,000 active SMSFs.
- According to the regulations, the members of an SMSF should be older than 58 years, but the latest statistics shows that the median age of an SMSF member is dropped to 49 years.
- The most popular fund structure is individual trustees. Even 78% of all SMSFs have an individual trustee structure and 95% of new registered SMSFs have also selected the individual trustee option.