Comparing Super Fees

Article supplied by The SMSF Club

A common myth in the superannuation industry is that managing a Self Managed Super Fund can very expensive – however this isn’t always the case.

In fact, depending on your circumstances, managing your own super can be significantly cheaper than the fees charged by retail and industry funds.

The SMSF Club offers two SMSF options to members, depending on their circumstances. The examples below compare fees of establishing an SMSF, with the average retail and industry fund fees.

It is important to always seek professional financial advice before making any investment decisions, and consider your personal circumstances and objectives.

Classic SMSF

 

Classic SMSF

Retail/Industry Super Fund

Fees

$2950 per annum ongoing flat fee.

2% of super asset in fund (*based on average industry fees, each fund differs in fees).

Inclusions

All admin and accounting, 24/7 access to your online portfolio, ongoing education, access to industry experts as well as excusive investment opportunities and more.

All admin and accounting, other inclusions depending on super fund.

 

Fees Comparison

Amount in super

Classic SMSF fees

Retail/Industry Fund fees

$10,000 

$2950 flat annual fee

$200 annual fee

$1,000,000 

$2950 flat annual fee

$20,000 annual fee

From the example above, you can see that clients with higher super balances; in this instance $1,000,000, could be paying far less fees with the Classic SMSF.

However, the majority of Australians are advised not to establish an SMSF if their super balance is relatively low. The SMSF Club offers a second option for members who currently have less than $100,000 in their super – the Mini SMSF.

Mini SMSF

 

Mini SMSF

Retail/Industry Super Fund

Fees

1.7525% of super asset per annum, plus $20 per member per month.

2% of super asset in fund (*based on average industry fees).

Inclusions

All admin and accounting, 24/7 access to your online portfolio, ongoing education, access to industry experts as well as excusive investment opportunities and more.

All admin and accounting, other inclusions depending on super fund.

               

As you can see, for clients with a lower super balance, the Mini SMSF is a great option if they are wanting to take control of their super, as the fees are very similar to the average retail and industry funds. The Mini SMSF allows younger Australians to establish their own SMSF, and start taking control of their investment decisions with their super.

Mini SMSF Example

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John and Simone are in their late 20′s and both have approximately $30,000 each accumulated in their super. They understand the importance of taking superannuation seriously at a young age, in order to have more money in retirement. Traditionally the costs of running their own SMSF have been too high; however, with the introduction of the Mini SMSF option, managing their own super is now within their reach.

As this fee is significantly less than what a traditional accountant would charge, and very similar to their retail super fund, taking control of their super is now a viable alternative.

A Mini SMSF is your very own personal super fund that gives you total control over how your retirement savings are invested. The key difference to a regular SMSF is the fees. An accountant traditionally charges a flat dollar fee, however the Mini SMSF is charged at a percentage fee based on the total balance of the SMSF, similar to how a retail or industry superfund charges fees.

Other things to consider

To work out whether a Classic SMSF or Mini SMSF is right for you, it’s important for you to consider the following six steps before making a decision:

  1. Ensure you have sufficient time and skills to manage your own SMSF.
  2. Consider the amount of super you need to make an SMSF viable. For a Mini SMSF you do require a combined minimum super balance of $50,000. (You can have up to four members for a Mini SMSF, if each member had a super balance of $15,000, you would easily meet this minimum).
  3. Develop a thorough understanding of the various SMSF investment alternatives available.
  4. Follow the super and tax laws and understand the risks.
  5. Be sure you can meet your record keeping and reporting obligations.
  6. Consider your options and seek professional advice.

 

 

Locations include Adelaide, Perth, Melbourne, Brisbane and Sydney.

 

Disclaimer: while due care is taken, the viewpoints expressed by contributors and/or sponsosrs do not necessarily reflect the opinions of Your Investment Property.

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Comments
  • Pascoe says on 26/11/2013 05:11:45 PM

    2% fees for retail/industry ?......that's a load of crap.......you shouldn't be paying more than 1%, in that case 300k would be the point you look at a SMSF.

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