New research reported in The Financial Standard suggests that for people with superannuation balances under $1 million, it might not be the best idea.
The research, which looked at the full period (2008-2012) for which the ATO has data, found that:
- Self-managed funds with less than $100,000 underperformed super fund benchmarks in every year
- Self-managed funds with between $200,000 and $500,000 also underperformed in four out of the five years, often by significant margins
- Self-managed funds with balances between $500,000 and $1 million also underperformed the All Super Fund benchmark in four of the five years, but by less significant margins
- Only self-managed funds balances above $1 million outperformed the benchmarks more often than not.
The researchers concluded “The data suggests that funds with less than $1 million in assets under management are at a considerable performance disadvantage when compared to larger SMSFs and professionally managed super funds.”
And then there are the compliance and audit obligations. While your money is with Vision Super, we look after things like administration, accounting, compliance and audits for the fund.
But ATO Assistant Commissioner for Superannuation Matthew Bambrick has said
“We do find worrying numbers of trustees [of self-managed funds] who have little or no idea about their obligations and who appear to have assumed that their tax agent or accountant will take all responsibility. While many advisors and tax agents will ensure that trustees meet their obligations, it’s important for trustees to recognise that they themselves are the ones who are accountable.
We also find reasonable numbers of trustees who don’t fully understand aspects of their obligations and this has led to them reporting incorrectly on their SMSF annual return or having a contravention reported to us by their approved auditor.”
What’s more, breaching ATO requirements may lead to a self-managed fund being closed down:
In the 2012-13 year we made 150 funds non-complying with the consequent loss of tax concessions, disqualified 440 people from being a trustee, wound up 70 funds and entered into 513 enforceable undertakings.”
With an industry fund like Vision Super, you get the best of both worlds – a fund that’s run to benefit members, not to make a profit, and a variety of investment options to choose from – without the potential headaches and compliance nightmares that can come with managing your own super.
At a self-managed super fund forum presentation, October 2013.