As at March 30, 2010 self managed super funds (SMSFs) had approximately $400 billion in assets under management.   Deloitte’s actuarial arm, Trowbridge Deloitte, predicts that self managed funds will grow pre-retirement assets to $568 billion in 2015, before increasing to $961 billion by 2021.

There are currently around 422,687 SMSFs in Australia and the number of funds is growing at about 6,500 per quarter.

The average account balance of a SMSF per member is $458,467.

Australians can choose to contribute their personal superannuation contributions to an independently managed superannuation fund or to a self managed superannuation fund.

SMSFs (also known as DIY funds) perform the same role as other funds, by investing contributions and making them available to members on retirement.  The difference is, generally, that the members of self managed super funds are also the trustees – they control the investment of their contributions and the payment of their benefits.  With all members being trustees, they are in a position to ensure their interests as members are protected.

Generally, a superannuation fund is a self managed super fund if (with a few exceptions):

• it has a trust deed that meets the requirements of the Superannuation Industry (Supervision) Act 1993 (SIS Act)
• it has four or less members
• each member of the fund is a trustee
• no member of the fund is an employee of another member of the fund, unless they are related, and
• no trustee of the fund receives any remuneration for their services as trustee.

Trustees
All members of self managed super funds are trustees – they control the investment of their contributions and the payment of their benefits.

The role of a trustee should not be taken lightly.  Trustees of self managed super funds are ultimately responsible for the running of their fund.

Trustees should familiarise themselves with the legislative requirements and administrative responsibilities of running a fund.  These rules exist to ensure a fund’s assets are protected until they are needed at retirement.  There are significant penalties imposed on trustees who fail to perform their duties.

Approved Auditors
Trustees of a self managed super fund are required, for each year or part year that the fund is in existence, to appoint an approved auditor to audit the operations of the fund.

An approved auditor may be a registered company auditor, the Auditor-General of the Commonwealth, a state or a territory, or a member of a professional organisation.

Auditors play a critical role in helping to ensure that trustees comply with the legislative requirements of the SIS Act and the Superannuation Industry (Supervision) Regulations 1994 (regulations).

Tax Agents
Trustees of a self managed super fund are required to lodge an income tax and regulatory return for the fund each year.  They may get a tax agent to complete and lodge the return for them.   Trustees must ensure that the tax agent has enough information to complete the return.

Accountants
Trustees of a self managed super fund must keep accounting records that record and explain the transactions so that a statement of financial position and an operating statement can be prepared.   Trustees may get an accountant to help with these duties.  Often a fund’s accountant will also be the fund’s tax agent.

Financial Advisers
Trustees of a self managed super fund may obtain help from a financial adviser.  A financial adviser can:

• help draft an investment strategy
• provide advice on types of investments, and
• help ensure that members’ investments and level of contributions meet their retirement needs.

Ultimately, the trustees of a superannuation fund are responsible for the investments of their fund.

The ATO have developed a series of booklets that encompass a life cycle approach for thinking about, setting up, running and winding up SMSFs.   For more Superannuation fact sheets and publications from the ATO, please click here.