Growing your investment funds systematically through superannuation is a great way to invest for your retirement. While workers are legally entitled to join a fund when they are employed, you may also elect to join and contribute to a self managed superannuation fund or diy super funds.

Nature of DIY Super Funds

Self managed superannuation funds (SMSFs) are funds established for a small group of people, typically less than 5, and regulated by the Australian Tax Office. As a trust fund, the fund members or contributors are its trustees as well, having the responsibility for the prudential operation of their funds and in shaping and implementing an investment strategy. Its assets and money are not for the personal use of any of the trustees or other third party and are solely for providing retirement benefits for its members.

Advantages of super funds

Super funds, including DIY super funds, are entitled to tax concessions such as a lower income tax rate and allowable deductions for contributions made. In some cases the funds may even provide insurance coverage as well as total and permanent disability insurance for its members as well as enjoying Government benefits.

Who can join?

Whether you are employed or not, generally, anyone can join a super fund. Your spouse can contribute for you until you reach the age of 65 if you have a low income or you’re not employed. If you’re self employed, you can also opt to join and contribute to a fund and claim a full tax deduction for contributions you make.

Limitations of DIY superannuation

This type of super fund is governed by super laws and the trust deed which is a legal document setting out the rules for establishing and operating the fund. In particular, the trust deed will specify:

• the powers, duties and responsibilities of the fund’s trustees
• the rights of the members
• the fund’s objectives
• who the trustees are
• qualifications of a trustee
• manner of appointment and removal of trustees
• qualifications of members
• when contributions can be made
• how to avail of benefits
• appointment of professional advisers like an auditor
• winding up procedures

While a self managed superannuation is a do-it-yourself arrangement, it requires a generous amount of your time and investment skills to manage and operate profitably. Complying with the strict requirements of super laws and seeking expert advice at the outset is distinctly advisable for anyone wanting to set up one.