There are several different types of superannuation funds. Knowing the different types of funds will make it easier for you to choose a fund that is appropriate for your purposes. Superannuation funds can be grouped into several categories. Features differ in each category.
These are usually run by banks or investment companies; their general characteristic are as follows:
Industry Superannuation Fund
Larger industry superannuation funds are open for anyone to join. Some others are restricted to employees in a particular industry. The main features of an industry fund are:
Public Sector Funds
Public sector funds were created for employees of Federal and State government departments. Most are only open to government employees. The main features are:
Corporate Superannuation Funds
A corporate fund is arranged by an employer, for its employees.
Some larger corporate funds are ’employer sponsored’ funds where the employer also operates the fund under a board of trustees appointed by the employer and employees.
Other corporate funds will be operated by a large retail or industry superannuation fund (especially for small and medium-sized employers).
Features of these funds include:
Eligible Rollover Fund
An Eligible Rollover Fund (ERF) is a holding account for lost members or inactive members with low account balances. These funds often have low investment returns and may charge high fees.
Your money is likely to grow faster if you consolidate your ERF with your active superannuation fund.
Self-Managed Superannuation Fund (SMSF)
SMSFs are essentially DIY superannuation for those that want the hands-on control with their superannuation. Of course, with added control comes added responsibility and workload.
SMSFs can be suitable for people with significant superannuation savings and skills in financial and legal matters. You must be prepared to research and track your superannuation investments regularly if you want to manage them yourself.
You can set up your own private superannuation fund and manage it yourself, but only under strict rules regulated by the Australian Taxation Office (ATO).
A SMSF can have one to four members. Each member is a trustee (or director if there is a corporate trustee).
Running your own fund is complex so think carefully before setting one up. If you set up a SMSF you must:
If you’re running a SMSF, you will typically need:
You can pay an adviser a fee to do the administration or help with the investment decisions for your SMSF. However, you cannot pass on the responsibility of being a trustee or director.
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