Running a SMSF

Self managed super fund provide members of the SMSF the ability to 'self-manage' their superannuation benefits. This means that as members of a SMSF, they are also acting in the role as a trustee having an active role in the management of the super fund.

The trustee of the SMSF will control all aspects of the operation of the SMSF, including making investment decisions and executing those decisions.

The trustee operate the SMSF's bank account, make investment decisions and invest accordingly. The SMSF can also purchase life insurance policies to protect members in the event of death or incapacity.

Funding the SMSF

Initially, members of the SMSF may organise roll-overs of their existing superannuation money into the SMSF and may start contributing to the SMSF. The SMSF can accept superannuation contributions from members' employer and all other contributions, including personal contributions.

During the accumulation phase, the goal is to grow your superannuation and maximise returns within an acceptable level of risk as stated in the SMSF's investment strategy formulated by the trustees. You, as a trustee, will invest accordingly having regards to members' objectives and circumstances.

At the centre of your SMSF is a bank account. Contributions, rollovers and investment incomes are deposited into the SMSF's bank account. The money in the bank account are used to make investments in accordance with the formulated investment strategy. The trustees decide on the timing of acquisition and disposal of assets.

Life insurance

Tax deductible insurance policies can also be purchased to protect members. The SMSF can obtain the following tax deductible cover for members:

• life and TPD insurance, and
• income protection insurance.

Although it is not compulsory to obtain life insurance for members, the trustees of the SMSF must determine and regularly review whether the SMSF should hold a contract of insurance that provides insurance cover for members of the SMSF.​

Operating standards

Running a SMSF also entail managing the administration and ensuring that the SMSF is operated in accordance with the trust deed and superannuation laws. Superannuation laws impose certain standards on trustees, including:

• acting honestly in all matters concerning the fund,
• exercising skill, care and diligence in managing the fund,
• acting in the best interests of all the members of the fund,
• ensuring that fund assets are kept separate from your personal assets, and
• keep members informed and allow access to information.

Benefits payment

Once you reach your preservation age, at your option, you may commence a transition to retirement income stream to ease you into your retirement. You can commence a transition to retirement income stream even if you are still employed full-time. Your preservation age is between 55 and 60 depending on when you were born.

When a member retires and commence a income stream/ pension, the SMSF will make pension payments to the member. The pension is subject to a minimum amount, depending on age, starting at 4% of pension account balance.

Type of income stream that can be commenced:

Lump sum benefits payment can be paid to a member who has satisfied a condition of release. A person generally satisfied a condition of release when that person:

• is over their preservation age and retired (employment has come to an end and the person intends never to again become gainfully employed either on a full time or part time basis),
• is over the age of 60 and an arrangement under which the person was gainfully employed has come to an end after that person is over the age of 60, or
• is over the age of 65.