Self Managed Superannuation Fund Pros and Cons

What is superannuation? 

Superannuation according to the Australian Taxation Office the ATO is money put aside by your employer over the course of your working life that you live on once you
Retire. Superannuation is extremely important as you need a good amount of money to live off when you’re no longer working as long as you continue to work and make regular payments to your super your investment will grow until the day you retire or until you reach a certain. There are various types of superannuation funds including Retail super funds, Industry super funds,
Corporate or Public sector funds and Self-managed super funds or SMSF.

What is a self-managed superannuation fund?

An SMSF is a private super fund that you manage yourself. SMSFs provide greater flexibility and allow investors to hold a range of assets including shares, term deposits, bonds, investment properties, cash and unlisted assets.

A successful SMSF can be highly rewarding, but it can also come with greater risk than a regulated super fund. Managing an SMSF also requires some work and it’s important to seek guidance from a trusted financial adviser. Here are the advantages and disadvantages:


1. Broader investment strategy
SMSFs can invest in more assets compared to other super funds such as shares, direct property (commercial or residential), physical gold and other commodities, collectibles such as artwork subject to strict requirements, and managed portfolios. SMSF benefits also include the flexibility of borrowing within your fund for investment purposes. Also, some small business owners may hold their business premises within their SMSF for a variety of reasons including asset protection, succession planning and security of tenancy.

2. Greater control of investments
Choice of where your money is invested. SMSF members also have greater flexibility on when they acquire and sell their investments, as market conditions can quickly change.

3. Effective tax strategies
In an SMSF, you have greater control of your assets and investment decisions which may allow you to better manage the tax position of the SMSF. The current tax rate on earnings within a superannuation fund is 15% but where the income is produced by assets wholly supporting an income stream such as a pension, there is no tax payable within the fund on that income. This difference in tax rates means that by having control over the disposal of assets you may be able to reduce or potentially eliminate a capital gains tax liability.

4. Ability to pool your Super 
Another benefit to an SMSF is the ability to pool your resources with up to three other members; this increased pool may allow you to access investment opportunities that may not be available otherwise to your SMSF.

5. Estate planning
Better control over how and who your super benefits are paid to. Ability to structure payments in a more tax effective way

6. Pension flexibility
Pay pension covering at least the minimum required on a regular basis when and how you want. Unlike many public offer superannuation funds, which tend to require binding death benefit nominations to be updated every three years. 

7. Adding value with property
Adding to your SMSF with property can be another way to grow your Super. Owning property through your SMSF typically involves the fund of wiring a residential or commercial rental property which is leased to unrelated tenants. Fund members or relatives can’t rent a residential property from an SMSF because of the in-house assets test.


1. No access to compensation
Compensation can’t be received for losses incurred due to theft or fraud.

2. No access to SCT
The Superannuation Complaints Tribunal (SCT) settles disputes. Disputes settled by members, or by the courts

3. Greater responsibility
Requires continuing attention, hence “self managed”, you have an ultimate responsibility as a trustee for everything such as investments, tax returns, etc.

4. Time consuming
Keeping up to date with all the changes in rules and regulations, paperwork and management can be time consuming.

5. Cost involved
Low balance SMSFs can be costly to run. Minimum balance of $250,000+ is advised.

6. Loss of insurance
There is no automatic insurance for SMSF. You need to apply for cover. Rolling over Super could cancel insurance already held. You need to review insurance before rolling over.

7. Superannuation is preserved
You can only have access if you meet certain conditions.


If you have any questions about SMSF loans feel free to contact us at or give us a call at 0426667696

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