Superannuation Objectives:

There are many different superannuation funds each with their own features, benefits, costs structure and disadvantages. In choosing a suitable superannuation fund there are a myriad of considerations that need to be balanced and addressed. There is the level of control, flexibility, freedom, access to investments, relationship with the trustee and taxation implications. A consultation with an experienced Tax and Superannuation Lawyer can ensure that the superannuation fund you select is suitable for all your needs, goals and expectations and is compliant with superannuation and taxation law.

The first type of superannuation fund is the retail superannuation fund which is offered publicly and are operated by fund managers who may act as the trustee of the fund as well as the administrator. This establishes an arm’s length relationship between the members and the trustees of the fund. The trustees generally operate pools of money with a specified investment strategy for each pool. Money invested by members is added into these pools. Each member’s entitlement is determined by the allocation of units and the current unit price. The benefit of a retail superannuation fund is professional management for both the operation of the fund as well as investment management. However, this may be offset by higher fees, restricted investment choice, lack of control and a loss of some potential tax benefits.

The second type of superannuation fund is the employer superannuation fund which is operated by organisations for the current employees of that organisation. The trustee structure comprises employer and employee representatives. This establishes an arm’s length relationship between the members and the trustees of the fund although members have an indirect say in the operation through their representatives. A variation is a corporate superannuation fund which is offered by a fund manager on behalf of an employer. With a corporate superannuation fund the contract to set up the fund is arranged between the fund manager and the employer. The trustee generally operates pools of money with a specified investment strategy for each pool. Money invested by members is added into these pools. Each member’s entitlement is determined by the allocation of units and the current unit price. The benefit of an employer/corporate superannuation fund is the professional management for both the operation of the fund as well as investment management. Members may also gain cheaper and easier access to insurance through group policies. In some cases, employers may pay additional contributions or pay the fees for the operation of the fund. However, this may be offset by restricted investment choice, lack of control and a loss of some potential tax benefits.

Thirdly are industry superannuation funds which were originally linked to a trade union and available only to people who worked in a particular industry. Increasingly, industry superannuation funds are expanding their membership base so that those working in other industries and the general public can be members. Industry superannuation funds are generally “not-for-profit” funds. Organisations contracted by the trustee to provide services such as operation of the fund and investment management may derive a profit from providing these services, but the fund does not generate profits for itself. The trustee structure of an industry superannuation fund comprises employer and employee representatives. This establishes an arm’s length relationship between the members and the trustees of the fund, although members may have some indirect say in the operation through their representatives. The trustee generally operates pools of money with a specified investment strategy for each pool. Money invested by members is added into these pools. Each member’s entitlement is determined by the allocation of units and the current unit price. The benefit of an industry superannuation fund is the professional management for both the operation of the fund as well as investment management with lower expected fees. Members may also gain cheaper and easier access to insurance through group policies, although generally only for limited amounts of cover. These advantages may be offset by restricted investment choice, loss of control and a loss of some potential tax benefits.

The final type is the Self Managed Superannuation Fund (SMSF). Trustees of SMSFs are prohibited from receiving remuneration for their duties as trustees, but may be remunerated for providing duties and services in another capacity (for instance not as trustees) provided certain conditions are satisfied. As trustees and members of an SMSF, they participate actively in the operation of the fund in all respects. That is, they have full responsibility for the fund’s management, investment and general administration functions, usually with the assistance of one or more external service providers (such as accountants, tax agents, investment advisers or managers). The trustees can choose any investment for the fund provided if it fits within the fund’s documented investment strategy and does not breach any applicable superannuation laws. An SMSF’s investments can include direct and managed investments, thus giving the trustees a wide choice of investment options. The benefit of an SMSF is direct control, a wider investment choice, greater control over taxation benefits and potentially lower fees for larger balances. These advantages may be offset by the time required to manage the fund, the personal risks of acting as trustee and lack of expertise.

Professional and holistic legal advice from a Superannuation and Taxation Lawyer coupled with sound financial advice may be hugely beneficial to ensure that the correct superannuation fund is chosen that suits your superannuation objectives. A consultation with an experienced Tax and Superannuation Lawyer can ensure that you choose a fund that meets your objectives and expectations.

 If you would like further information or wish to discuss your Superannuation matter with us please do not hesitate to contact us by telephone on (02) 9233 4048 or by email to info@navado.com.au. 

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.