Superannuation Advice

Most superannuation funds are industry, retail or public sector funds. (Some large companies may also have corporate funds for their employees.) Depending on your fund, you may be able to change your risk tolerance and investment mix, but the investments themselves will be made by professional investment managers employed by your fund.  

Self-managed super funds (SMSFs), on the other hand, are private super funds that can only have up to six members. SMSFs are established as trusts, which means they have trust deeds and trustees; you and the other fund members can choose whether you want an individual trustee or a corporate trustee structure.  

One of the main benefits of an SMSF is that, because it’s privately managed, you and your fellow members have total control over how funds are invested. You can also invest in a greater diversity of asset classes, including real estate and collectibles.  

On the other hand, though, SMSFs are expensive, risky, and come with a high compliance burden. All members are legally responsible for the fund’s compliance and decisions, even if there’s a corporate trustee in place. You’ll also need to pay someone to set up your SMSF, and, unless you’re an experienced investor, provide you with investment advice. 

If you’re interested in the idea of having an SMSF, talk to your financial adviser. They can explain the pros and cons, model whether an SMSF is more cost-effective than a different kind of fund, help you develop an investment strategy, and support you with setup and compliance.

According to ASFA, you’ll need $595,000 to retire comfortably as a single person at 65. Couples need just $690,000 between them to achieve a comfortable retirement. (A comfortable retirement is one that allows you to maintain a good standard of living – good healthcare, occasional meals out, leisure activities, a reliable car, and a well-maintained home.) 

If you have $100,000 in super at retirement (as a single person or as a couple), you can maintain a modest post-work lifestyle – basic healthcare, an older vehicle, limited takeout meals, and so on. Your super income will be supplemented by the Age Pension, so you won’t need as much as someone living a comfortable retirement.  

Keep in mind that, if your super isn’t currently on track, you still have plenty of options. Your financial adviser can help you do things like adjust your super strategy and increase your concessional contributions, which can improve your balance over time.  

If you still have super when you die, your super fund will pay out the remaining amount to your beneficiaries (known as a ‘super death benefit’). Depending on the rules of your fund, you can nominate who gets your super through either: 

• a non-binding nomination (in which case the super fund trustee can use their discretion to decide how your super is distributed to your dependents or beneficiaries) 
• a binding nomination (in which case your specified dependants and/or legal personal representative will receive your super). 

Your fund may also allow you to choose between lapsing nominations, which need to be renewed every three years, and non-lapsing nominations, which don’t need to be renewed. 

Generally, you can only access your super once you’ve reached your ‘preservation age’ and have permanently retired. If you were born before 1 July 1960, your preservation age is 55. If you were born from 1 July 1960 to 30 June 1964, the age you can access your super varies from 56 to 59. If you were born after 1 July 1964, your preservation age is 60. 

You can choose to access your super as a lump sum withdrawal, a super income stream, or a combination of both. Talk to your financial adviser about what access methods are permitted by your fund and what the tax implications will be.   

Even if you’re still working, you may be able to access your super via a transition to retirement income stream (TRIS), which can enable you to reduce your working hours. Keep in mind that there are limits to how much super you can access under a TRIS.