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Understanding SMSF trustee responsibilities

Self-managed super fund (SMSF) trustees have onerous duties and responsibilities in relation to the management of their fund.

An SMSF trustee primarily needs to ensure the fund is properly managed for the benefit of members for their retirement.

All trustees must ensure the fund assets are held in trust and invested on behalf of the members. Trustees need to ensure their fund complies with all super rules including super laws and the fund’s trust deed.

Trustees must regularly review and update the fund’s trust deed and investment strategy in accordance with the law and the needs of the SMSF’s members.

Another responsibility is to accept contributions and paying benefits (income streams and lump sums) in accordance with super laws and the fund’s trust deed. Trustees must also advise the Tax Office of any changes in trustees, directors or members within 28 days of the change taking place.

SMSF trustees also have the duty of undertaking various administrative tasks such as lodging annual returns and record-keeping, as well as ensuring an approved SMSF auditor is appointed for each income year.

Where a conflict arises between your wishes as a member and your legal responsibilities as a trustee, you must comply with your trustee obligations. For example, if a relationship breakdown occurs between members, you must continue to act in the best interest of all members at all times and in accordance to the trust deed and with super laws.

It is also critical to keep fund assets (including money) separate from your personal and business assets. Fund assets should be solely used for fund purposes.

Finally, trustees are reminded that member benefits (money or other assets) cannot be accessed earlier than what is legally permitted (generally, until a member reaches preservation age). Member benefits can only be accessed in very limited circumstances, i.e., severe financial hardship and so on.

Remember, contravention of any of the super laws can result in significant penalties, including fines and jail terms.

Posted on 14 August '17 by , under Super.

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Superfund categories and what they mean

There are four different categories of super funds. These have different primary features and are more applicable to certain people than they are to others.

Retail super funds

Anyone can join retail funds. They are mostly run by banks and investment companies:

  • Allow for a wide range of investment options.
  • Financial advisors may recommend this type of fund as they receive commissions or might get paid fees for them.
  • Although they usually range from medium to high cost, there may be low-cost alternatives.
  • The companies that own these funds will aim to keep some of the profit they yield

Industry super funds

Anyone can join bigger industry funds, but smaller ones may only be open to people in certain industries i.e. health.

  • Most are accumulation funds but some older ones may have defined benefit members
  • Range from low to medium cost
  • Not-for-profit, so all profits are put back into the fund

Public sector super funds

Only available for government employees

  • Employers contribute more than the 9.5% minimum
  • Modest range of investment choices
  • Newer members are usually in an accumulation fund, but many of the long-term members have defined benefits
  • Low fees
  • Profits are put back into the fund

Corporate super funds

Arranged by employers for employees. Large companies may operate corporate funds under the board of trustees. Some corporate funds are operated by retail or industry funds, but availability is restricted to employees

  • If managed by bigger fund, wide range of investment options
  • Older funds have defined benefits, but most are accumulation funds
  • Low to medium costs for large employers, could be high cost for small employers

Self-managed super funds

Private super fund you manage yourself. Many more nuances to this type of fund. Most prominent feature is the autonomy over investment.

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