Setting up a self managed super fund: Part 1

Setting up a self managed super fund (SMSF) is about more than taking steps to get it started. You also need to make important decisions about how to structure and run your super fund.

We recommend that you seek professional financial advice before setting up your own super fund. However, we hope to help you gain a better understanding of the essentials by:

1. Helping you understand how you can structure your super fund
2. Provide the steps you will need to take to set up your super fund and start operating it
3. Explain your obligations and responsibilities towards running and operating your self managed super fund
4. Show you where to go for more information

Setting up and operating a self managed super fund (SMSF) is a major financial decision. The responsibility for running the fund and complying with the law rests solely with you as trustees. While SMSFs are great for some people, they don't suit everyone. Managing your own super fund takes time, knowledge, skill and money, so before setting up a SMSF, you should speak with an experienced financial planner who will provide you with more information on what's involved in managing your own fund and what it means to be a trustee.

You need to:

• consider whether you have the time, knowledge and skill to manage your own super and whether you have the assets and money to make the fund viable
• compare the costs and benefits of running an SMSF with other retirement saving options
• make sure you're setting up the fund, solely to pay retirement benefits to members
  

When you set up an SMSF, you will take on the role of either a trustee or a director of a company that is a trustee (called a corporate trustee).

A trustee is a person or company that holds and invests the fund's assets for the benefit of the members' retirement. As a trustee/director, you will be responsible for the following:

• running the fund
• making decisions that affect the retirement interests of each fund member, including yourself

You will also need to comply with all super and tax laws to ensure that the super fund is entitled to tax concessions and members' interests are protected.

You will also need to

• act in the best interests of all fund members when you make decisions
• manage the super fund separately from you own financial affairs
• ensure the money in the super fund is only accessed where the law allows it

Being a trustee gives you the chance to actively manage your own super and make your own investment choices, but it also brings responsibilities. All trustees and directors are equally responsible for managing the fund and making decisions - even if one takes a more active role in its day-to-day running.

Remember that managing your own super fund is a big responsibility and it's important that you make sure it's the best option for you. You can speak to a financial planner at Intellichoice on 1300 55 10 45 for more information about SMSFs. They will be able to work out with you whether this is the best option for you based on your goals and current financial circumstances.