There are a lot of differences between SMSFs and other super funds, but the one thing they have in common is to provide retirement benefits to their members.
Members and trustees
SMSF
Other super funds
SMSFs can have a maximum of 6 members.
All members are either individual trustees or directors of a corporate trustee of the fund. This means all members are involved in managing the SMSF.
Some State and Territory laws restrict the number of trustees a trust can have to less than 6. As an SMSF is a type of trust, it is important that clients seek professional advice to help understand if their SMSF is impacted by these restrictions. Alternatively, they could restructure/structure their SMSF to have a corporate trustee, where each member is a director of that corporate trustee.
Usually no limit on the number of members.
Professional, licensed trustees are responsible for managing the fund.
Responsibility
SMSF
Other super funds
Trustees are expected to have knowledge of tax and super laws and must make sure their fund complies with those laws. Compliance risk is borne by the SMSF trustees, or the directors of the corporate trustee, who can be personally fined if their fund breaches the law.
Compliance risk is borne by the professional licensed trustee.
Investments
SMSF
Other super funds
Trustees develop and implement the fund’s investment strategy and make all investment decisions.
Most allow you some control over the mix and risk level of your super investments, but you generally can’t choose the specific assets your super will be invested in.
Insurance
SMSF
Other super funds
Trustees must consider whether to purchase insurance for their members. Insurance premiums may be higher than in other super funds.
Most offer insurance cover to members. Member insurance usually costs less as large funds can get discounted premiums.
Regulation
SMSF
Other super funds
Regulated by the ATO. Trustees are required to engage with us to manage their fund.
Regulated by the Australian Prudential Regulation Authority (APRA). Generally members don’t have to engage with APRA.
Complaints/disputes
SMSF
Other super funds
The ATO is not involved in resolving disputes among members. Disagreements can be resolved through alternative dispute resolution techniques or in court, at the members’ own expense. There is no government compensation scheme.
Members have access to the Australian Financial Complaints Authority (AFCA) and may be eligible for statutory compensation.
Fraudulent conduct or theft
SMSF
Other super funds
No government financial assistance is available to SMSFs.
Members may have legal options under Corporations Law but there is no guarantee that compensation will be awarded.
Be aware of who you provide your personal information to. If you are approached by a financial adviser, make sure they are registered with ASICExternal Link.
Members may be eligible for government financial assistance in the event of fraud or theft.
Last modified: 09 Aug 2022
QC 47220
https://www.ato.gov.au/Super/Self-managed-super-funds/Thinking-about-self-managed-super/Compare-SMSFs-with-other-super-funds/