# Self Managed Super



## Redwing (24 August 2004)

Hi guy's,

just wondering, does anyone here have thier own self-managed superfund?

Spoke with someone today who said it would cost $1500 as a one-off fee to ransfer your super to a SMF and would cost approx $150 p/yr for the accountant to do books for it.

i've asked them to post info out..

anyone done this? or have hints/tips?

REDWING


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## ghotib (25 August 2004)

I've been hoping someone would respond to this with personal experience.

My only comment is to be VERY careful that your super fund stays compliant, because the results of investing and/or contributing outside the rules are already very nasty and likely to get more so as the number of self-managed funds grows. I would expect to pay more than $150 p.a. for the sort of advice that would make the effort of a self-managed fund worthwhile. 

We looked at it and decided against it for the moment. We've gone for wrap funds, which give us lower fees and wider investment choices than standard funds but leave us free from the compliance responsibility. 

That said, provided you fully understand the restrictions and requirements, and you can keep up with the changes (an Olympic challenge over the last 10 years), superannuation can be an excellent investment structure. Just be very sure about your advice. 

Good luck,

Ghoti (not an accountant; or a lawyer; or a financial adviser; or anything else that requires a licence except a motor vehicle driver)


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## jkool (25 August 2004)

Guys I dont know much about super so cant really contribute here but reading your post ghotib you said:

"We looked at it and decided against it for the moment. We've gone for wrap funds, which give us lower fees and wider investment choices than standard funds but leave us free from the compliance responsibility"

This left me wondering how did you managed to go for wrap (or any other) funds on your own. I was of impression that you cant really choose the superfund and need to stick to whichever your employer has an agreement with regarless of how sucky that super fund may be. 

Basically I would love to use different superfund to the one I need to use but I was told that I cant really choose here. Was I given wrong advice or am I just mixing things up here?

Thanks


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## Redwing (25 August 2004)

JKOOL..

I believe you can now choose 'who' your employer puts your super with, unless your a government worker or in defence forces.

We've all done it at work and now my employer contributions got to my old personal super scheme, it's all in one neat package..

Hi Guy's see article below re: Super also..


Sydney Morning Herald
By Alan Kohler
August 25, 2004

I've been inundated with responses in the past couple of weeks to recent columns on the pitfalls of choosing super funds and investing lump sums. 
It's clear that Australia's superannuation system, about which there is much back-slapping in Canberra, is actually an appalling mess and about to get worse next year when super choice starts.

Here are the key problems: Long-term saving has become a lottery because of unpredictable performance and fee variations among funds. Wide inequality in retirement incomes is emerging because of uninformed decisions and bad advice. The private pension system for retirees is so mysterious that even experts struggle. The complexity means Australians are at the mercy of advisers, many of whom are excellent and many of whom are crooks.

We are nearing the end of a two-decade transition from a relatively simple system that combined the old-age pension with defined benefit pensions for those lucky enough to work for the government or the right company, to individual sharemarket-based savings - compulsory plus voluntary - via two competing super fund cartels (retail master trusts and industry funds) which produce retirement lump sums to be invested in a range of private pensions sold by the same cartels.

During each of the two life stages - work/saving and retirement/spending - the investment, fee and taxation issues are too complicated for any individual to tackle. This means an adviser is compulsory and the cost of that is a tax.
Product disclosure statements from super funds are typically 80 pages, half of which is a description of a ridiculous array of investment options. 

The complete impossibility of digesting four or five of these things means super choice will be a superficial farce: 90 per cent of employees, or more, will go for the default option. This means the vast majority of super outcomes will be determined by employers - who choose the defaults from a beauty parade.

Upon retirement the saver is handed his or her lottery win (size determined by luck) and told to go forth and buy a pension. And if our saver thought that getting there was a complicated gamble, wait till they venture into the world with their winnings.

They can buy a lifetime annuity, an allocated pension, a market-linked income stream, or a term annuity, ranging from about 5.8 to 12.3 per cent of the capital in income per year. Depending on the choice, the money runs out somewhere between 75 years of age and death. With each pension there is a different set of complex tax and benefit rules, and with each the fees are hidden. Advice is essential (for a fee, of course).

Here are a few ideas for simplifying the superannuation saving system, prepared with the help of Geoff Dunsford of Rice Walker Actuaries. Entry and exit fees on super banned. Management fees to be a single figure, expressed in both percentage of account balance and dollars.

Simplified disclosure statements up to 10 pages should be mandated, containing no more than a few basic investment options (cash, balanced, conservative, growth) with more detailed PDSs available on request. Cash to be the standard default option (I'm not sure about this - it's Geoff's idea). A forecast of retirement benefits should be provided every couple of years, based on a stated, conservative investment return (this is my idea, not Geoff's). At retirement there should be a clear, simple statement of the potential income from the four main pension options (lifetime and term annuities; allocated and market linked pensions), and the likely age at which the money will run out.

Government policy is biased towards retirees buying pensions that eat the capital while they are alive because of an entrenched belief that their kids will waste it after they die.

At my request, Geoff Dunsford worked out that $100,000 invested in a lifetime annuity with 3 per cent indexation would produce net income of $5811, and nothing left over at the end, whereas investing the same amount in a company that pays a 5.8 per cent fully franked yield would produce after tax income of $5686 while preserving, and possibly growing, the capital for the children (and maybe shrinking it of course) - and the dividends would have an effect on the pensions means test as well.

Financial planners make their living from selling pensions, which means options outside the system are sometimes ignored.

At the very least, retirees should be told exactly what preserving their capital would cost them in lifestyle.

The 20-year shift of retirement risk from the government and companies to individuals is probably irreversible, so that we won't see a return of universal aged pensions and defined benefit super.

But perhaps we can get something closer to that than the alligator swamp we've got now.

REDWING


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## ghotib (26 August 2004)

Go Kohler!!!!  I missed this one Redwing, thanks for posting it. Kohler on superannuation makes a whole lot of sense, IMO.

jkool,  I had one employer 15 years ago who was happy to contribute to my personal fund; others more recently looked at me as if I had webbed feet and gills for suggesting it. I don't know if the new rules for personal choice (ha ha!) will force employers to contribute to any fund you nominate, but it's always worth asking (and in my experience the employers who think the idea comes from Mars tend to be thick as 2 short planks about other matters as well). 

My personal fund holds super rolled over from jobs as I left them, as well as the contributions made during employment. The retail funds now have standard procedures for transferring funds, although they don't like it and they dawdle. 

Cheers,

Ghoti

If you can't get your employer to contribute to a personal fund and you don't have any accrued super anywhere you could still set up a fund with additional contributions, though they might have to be post-tax. That's an area for good professional advice from people who know your personal situation. 

Hope this helps, even though it's definitely not advice.


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## prs (27 December 2007)

G'Day Redwing
I have a Self Managed Super Fund. For many years I persisted with Retirement Benefits Fund then moved to AMP. It cost me about $8000 to transfer to AMP and while I made about 17% for a year's investment became even more desperate to retire and wanted my money to work harder. I sought advice and in December 2006 bought a self managed super fund at a cost of about $400. I'm not certain how much it's going to cost to have it audited but I believe it will be about $300. 
I don't have the company from whom I bought the folder here at home as it's away being audited but if you like I'll give it to you when I get it back.


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## numbercruncher (27 December 2007)

Im just in the final stage of setting up a SMSF using esuperfund , $599 annual fee which includes the SMSF Audit , trust deed, ATO business etc etc - Im not an advisor so do your own research though as they say!

SMSFs are a huge growth Industry!


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## Prospector (27 December 2007)

There are many here who have their own SMSF.  We have had one since 1992 - quite radical for those days!  We have just had our books 'done' for the last FY, and it cost us $2500 which includes the necessary audit (about .4% of the total fund).  Once the SMSF is set up, it shouldnt cost anything to transfer existing Super accounts to it - we just did one last FY and it was free of costs.  I do all my own research - so I dont pay for financial advice.
Once you are familiar with the rules about how you can invest, then it really isnt that hard.  Ours has grown around 20% for the last few years - not too many insititutional funds will do that.


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