Superannuation is a great way to invest for retirement in Hobart because it permits to construct funds moderately until reaching retirement age. While workers are mostly entitled to join a fund when they are employed, someone may also decide to join and contribute to a self managed superannuation funds or DIY super funds.
Nature of DIY Super Funds
Self managed superannuation funds (SMSFs) are funds which formed for a small group of people, commonly less than 5. As a trust fund, the members are its trustees as well, having the authority for the prudential operation of their funds and in making and executing an investment strategy. The money is strictly for providing retirement benefits of its members and not for the personal use of any of the trustees or other third party.
Advantages of Super Funds
Super funds are entitled to tax concessions such as a lower income tax rate and allowable deductions for contributions made. These funds also enjoy government benefits and in some cases may even provide insurance coverage as well as total and permanent disability insurance for its members.
Who can join?
Generally, anyone can join a super fund, whether you are employed or not. If you’re not employed or having a low income, your partner can contribute for you until you reach the age of 65. If you’re a employee, you can also contribute to a fund and claim a full tax deduction for contributions you make.
Limitations of DIY superannuation
This type of super fund is governed by super laws and the trust deed which is a legal document setting out the rules for establishing and operating the fund. In particular, the trust deed will specify:
- The powers, duties and responsibilities of the fund’s trustees
- The rights of the members
- The fund’s objectives
- Who the trustees are
- Qualifications of a trustee
- Manner of appointment and removal of trustees
- Qualifications of members
- When contributions can be made
- How to avail of benefits
- Appointment of professional advisers like an auditor
- Winding up procedures
While a self managed superannuation is a do-it-yourself (DIY) system, it requires a liberal amount of time and investment skills to manage and handle profitably. Anyone thinking to set up, must be prepared to obey the strict requirements of super laws and seeking expert advice at the outset is highly advisable.