Self-Managed Superannuation Funds represent the fastest growing segment within Superannuation – the average SMSF now has $964,000 in assets.

People are choosing SMSF for the following key reasons

  • Having control over there Super Investments and their own retirement destiny
  • Flexibility and investment choices
  • Ability to purchase property and even borrow under some circumstances
  • Able to have cash and direct shares in addition to Managed Funds and ETF’s
  • SMSF can also own and pay for insurance on members
  • Estate Planning – control rests with the surviving trustee, not the trustee of a major super fund
  • SMSF tax returns can be completed in conjunction with personal and business returns to help minimise the excess contribution penalties

New superannuation regulations require SMSF trustees to:

  • regularly review the SMSF’s investment strategy
  • consider whether the fund should provide insurance for members of the fund
  • value fund assets at ‘market value’

The new regulations also empower the ATO to require SMSF trustees to keep money and assets separate from money and assets held by the trustee personally.


What are the key changes?

The New Regulations introduce key changes:

  1. Investment strategy – they introduce further requirements relating to the SMSF’s investment strategy, specifically
  2. an SMSF trustee must now ‘review regularly’ the fund’s investment strategy – an annual review is preferred
  3. as part of the investment strategy, an SMSF trustee must now consider whether to hold a contract of insurance for one or more members
  4. Market valuation of assets – they introduce a new requirement for SMSF assets to be valued at their ‘market value’ when accounts and statements of the fund are prepared.


Annual Investment Strategy

An SMSF trustee must formulate and give effect to (and now ‘review regularly’), an investment strategy which considers:

  • risk and return: the risks involved in, and likely return from the SMSF’s investments, having regard to its objectives and expected cash flow requirements;
  • diversity: the composition of the SMSF’s investments as a whole, including the extent to which they are diverse or expose the SMSF to risks from inadequate diversification;
  • liquidity: the liquidity of the SMSF’s investments, having regard to its expected cash flow requirements; and
  • liabilities: the ability of the SMSF to discharge its existing and prospective liabilities

Insurance to Protect Members and provide liquidity for the SMSF

An SMSF trustee must now also consider whether it should hold a contract of insurance for one or more members of the fund.  The trustee must do this when it formulates the investment strategy, and when it reviews the investment strategy.

This new requirement seeks to ensure that SMSF members consider their personal circumstances in relation to their need for insurance cover, such as life insurance.

The SMSF can own and pay for the following personal insurance

The insurance needs must be considered in conjunction with the investment review and the members personal insurance benefits held separately to their superannuation.

For further information please contact one of our advisers today.

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