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Difference between SMSF and other super funds

SMSF: SMSF can have a maximum of 6 members. All members are either individual trustees or directors of a corporate trustee of the fund. This means all members are involved in managing the SMSF. Some State and Territory laws restrict the number of trustees a trust can have to less than 6.

A self-managed super fund (SMSF) is a private super fund that you manage yourself. SMSFs are different to industry and retail super funds. When you manage your own super, you choose the investments and the insurance. Trustees are expected to have knowledge of tax and super laws and must make sure their fund complies with those laws. Compliance risk is borne by the SMSF trustees, or the directors of the corporate trustee, who can be personally fined if their fund breaches the law. Trustees develop and implement the fund's investment strategy and make all investment decisions.

Trustees must consider whether to purchase insurance for their members. Insurance premiums may be higher than in other super funds. Regulated by the ATO. Trustees are required to engage with us to manage their fund. The ATO is not involved in resolving disputes among members. Disagreements can be resolved through alternative dispute resolution techniques or in court, at the members' own expense. There is no government compensation scheme. No government financial assistance is available to SMSFs.

Members may have legal options under Corporations Law but there is no guarantee that compensation will be awarded.

Other Super funds: Usually no limit on the number of members. Professional, licensed trustees are responsible for managing the fund. Compliance risk is borne by the professional licensed trustee. Most allow you some control over the mix and risk level of your super investments, but you generally can't choose the specific assets your super will be invested in.

Most offer insurance cover to members. Member insurance usually costs less as large funds can get discounted premiums. Regulated by the Australian Prudential Regulation Authority (APRA). Generally, members don't have to engage with APRA. Members have access to the Australian Financial Complaints Authority (AFCA) and may be eligible for statutory compensation. Members may be eligible for government financial assistance in the event of fraud or theft.

*Source: ato.gov.au