Thinking of rolling your SMSF balance into an industry super fund?

Unlike an industry or retail super fund, a self-managed super fund (SMSF) is run privately. The members (typically a married couple) are responsible for the operation and investments made by the fund. Over time a member’s financial goals and their desired level of involvement in investment management may change. Transferring super back to an industry fund can provide greater peace of mind.

Differences between a SMSF and an industry super fund

There are several key differences between a SMSF and an industry or retail super fund to be aware of.
If your super is with a retail or industry fund the legal, admin, and financial responsibilities are with the fund. If you’re a trustee of a SMSF, all responsibilities are with you. This responsibility also extends to financial and legal penalties.
Fees and costs

Running a SMSF can incur a variety of fees and costs. These can include: yearly independent audits, valuations of the SMSF assets and legal fees (eg, if the fund deed needs amendments).

In an industry fund, the costs of running the fund and operating its investments are often pooled and spread across all the members, generally resulting in a lower ‘per head’ cost.

Investment options

In an industry super fund you’re able to take advantage of the expertise of investment managers. Additionally, complying with investment regulations lies with the industry fund, in a SMSF this responsibility lies with the trustee/members.

There may be more investment options for an SMSF than an industry fund, however an industry fund can invest at scale and can access direct investments that may not be accessible to SMSF investors (such as certain infrastructure / private equity / unlisted assets).

Insurance coverage and options

To have insurance through your SMSF, the SMSF trustees/members must obtain, receive approval for, and pay for it. The expenses associated with insurance are the responsibility of the trustees/members of the fund.

In an industry fund you can gain access to insurance through a group life policy, often without having to go through personal underwriting. Professionals in the industry fund handle the management and admin of the policy as well, for increased peace of mind.

Common reasons for rolling a SMSF balance over to an industry super fund

SMSFs are generally closed (also known as winding up) by trustees due to a change in circumstances, including:

Administrative burden

SMSFs require significant time, energy and admin to administer. Trustees may decide to reduce the hands-on effort required.

Divorce / Separation

In the case when one spouse was managing the SMSF and there is a separation, it could simplify arrangements to roll over to an industry super fund.

Passing of a trustee

If a trustee has passed away, it could impact the obligations and responsibilities of the remaining member/s.

A step-by-step guide to winding up your SMSF

Winding up your SMSF may seem like a complex task, but these steps can make it easier. Begin the process by speaking with your accountant or adviser today.

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FAQS about SMSF rollover

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