What is a Self-Managed Superannuation Fund?

Kayla Hawker • February 14, 2024

A self-managed super fund (SMSF) is a superannuation fund that you manage yourself. SMSFs are different to industry and retail super funds. When you manage your own super, you put the money you would normally put in a retail or industry super fund into your own SMSF. You make the investment decisions for the fund, and you are held responsible for complying with the super and tax laws.

A SMSF must be run for the purpose of providing retirement benefits for the members. All decisions you make as trustee of your SMSF must be in the best financial interest of the members.

How does a SMSF work?

A SMSF works to provide those entering their retirement age, as well as their beneficiaries upon death, with financial benefits.

These personally managed funds have their own Tax File Number (TFN), Australian Business Number (ABN) and transactional bank account. Through these, your SMSF can receive contributions and rollovers, pay out lump funds and pensions, as well as make investments. Any investment decisions host the name of the fund and are controlled by the trustees.

Due to it being a trust fund, a SMSF requires a trustee. You will automatically become a SMSF trustee due to it being your fund, but you can nominate up to six members, or choose to have a corporate trustee.

The differences between these two trustee structures are:

  1. Individual trustee:  You appoint up to six members to act as trustees of your fund, with a minimum of two trustees needed at any time.
  2. Corporate trustee:  A company of your choice acts as a trustee, with each member being a director.

The main advantage of a SMSF is that you are in control, and you know exactly where your superannuation funds are invested.

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