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Self Managed Super

Self managed superannuation funds are in the political spotlight at the moment as both sides of the Australian political spectrum debate the merits of the current taxation laws in regard to superannuation. There is a generational divide to this argument, as well, as younger Australians see unfairness in the current Australian economy, which favours wealthier, older Australians, providing them with far more substantial tax benefits through their superannuation contributions.

The statistical data, which shows that richer Australians are getting wealthier and that the gap between the ‘haves’ and the ‘have nots’ is widening, provides stimulus for those who demand a more equitable Australia. The political debate generally revolves around the differing strategies of the political parties, with those on the right side wishing to reward the ‘producers’ within the economy, and those on the left wanting to redistribute their wealth in search of a fairer economic community. In balance both arguments have genuine merit and Australia is in the process of finding that middle ground in regard to superannuation.

The advantages of self managed super are the investment options, which are far wider; meaning that your SMSF can invest in direct shares, property, cash accounts, unlisted assets and corporate debt. The generous and flexible tax benefits offered by an SMSF to its trustees are substantially superior to traditional industry or retail super funds. The SMSF is not really any cheaper to operate than public superannuation funds but there is a far greater level of control over these costs. Professional specialist advice is recommended when setting up your self managed super fund.

Superannuation is now most Australian’s second largest asset, after the family home, so it is a highly important and therefore emotive topic, when changes to policies are mooted by governments and political parties. Superannuation was implemented by the Hawke/Keating government to head off the looming pension crisis, caused by an ageing Australian population. Economists could see that the worsening ratio of taxpaying workers to older Australians, receiving social security payments through the aged pension, would produce an unsustainable budgetary position over the long term. Forced savings through super was supposed to drastically reduce the number of Australians who would require the support of a full aged pension, but softening asset and income test requirements, over successive governments, has seen sustained levels of older Australians on the aged pension.

Self managed super funds are here to stay and they offer greater control and benefits for their trustees. Adjustments to the levels of taxation breaks on contributions and the amounts of those contributions may occur down the track. The flexibility and autonomy offered by the SMSF will continue to see their popularity rise in the super marketplace.