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What is a self-managed super fund?

Updated on 27 November 2023

7 minute read

A self-managed super fund (SMSF) gives you ultimate control over your super. But is it right for you? In 2023, SMSFs made up just over 25% of the $3.4 trillion Australian superannuation pool. Let's explore how they work.

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What is a SMSF?

An SMSF is sometimes called a DIY super fund or do-it-yourself fund. It's a private superannuation fund that you manage yourself or pay other people to help you set it up.

You and the other members of an SMSF are also the trustees. Or you can get a corporate trustee. But either way, it means you're responsible for everything – including tax, investing, insurance, and making sure you don't break the law.

So, while you have more freedom in managing your own super, it takes a lot of time and effort. And you need to have the financial and legal skills to do it.

SMSFs in Australia
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1.1 million


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$876 billion

in assets

Source: ATO Self-managed super fund quarterly statistical report – June 2023.

How do SMSFs compare to other super funds?

The main difference with an SMSF is that you look after your super investments yourself. And unlike other types of super funds, all members of an SMSF must be trustees.

So, you're legally liable for all the decisions made by the fund. Even if other members make the decisions without you, or you get help from a professional.

With traditional funds like Australian Retirement Trust, you can still decide how your money's invested – from conservative to high growth options. You can even mix and match.

And the added benefit is that the fund looks after everything else for you.

As one of Australia's largest funds, we use our size and our scale to find and make investments and drive down investment costs.

How does a self-managed super fund work?

An SMSF can have up to 6 members, and the fund is run by all the members. It can be expensive to set up and keep it running.

In many ways they're similar to larger superannuation funds in how they work. Their sole purpose is to benefit their members when they retire.

  • Members make contributions into the fund.
  • Contributions are invested to grow retirement savings.
  • Members can access their super when they retire.

There are differences though, including how the government oversees self-managed super funds:

  • SMSFs are regulated by the Australian Taxation Office (ATO)
  • Other super funds are regulated by the Australian Prudential Regulation Authority (APRA).
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Setting up an SMSF

There’s a lot to do when setting up an SMSF. You’re responsible for managing and investing the fund’s assets for the benefit of all members when you and they retire.

Check these 11 steps for setting up an SMSF from the ATO:
  1. Choose an SMSF structure – either a single member fund or a multiple member fund, or individual trustees or a corporate trustee.
  2. Appoint your trustees.
  3. Create a trust deed to legally start your fund.
  4. Check your fund is an Australian Super fund and meets the residency rules.
  5. Hold your first assets with the trust deed.
  6. Register your SMSF and get an Australian business number (ABN) and tax file number (TFN).
  7. Set up a bank account for your fund.
  8. Get an electronic service address so you can get employer contributions.
  9. Create an investment strategy.
  10. Make a plan for the future to protect members from the unexpected.
  11. Prepare an exit plan for winding up your SMSF.

Self managed super fund rules

SMSFs operate under similar rules and restrictions as other super funds. It's important to stay up to date with any changes in superannuation and tax laws to avoid penalties.

Let's look at some of the things you'll need to know.

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SMSF trustee

You might be wondering what is a trustee?

A trustee of a super fund – including an SMSF – is a person or company put in place to manage the super fund for the members.

An SMSF can have up to 6 trustees, who are all members of the fund. This means they all share full responsibility for decisions about investing the super balance and following all the superannuation rules and laws.

Let’s compare this with one of the largest super funds in the country, Australian Retirement Trust.

  • We have a company as our trustee.
  • That trustee company has a board of directors.
  • They’re responsible for managing the fund and staying compliant with the legal requirements.
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SMSF compliance

SMSF trustees are responsible for all aspects of their fund. This includes complying with a range of legal and reporting requirements for setting up, running, and winding up the SMSF.

Just some of the SMSF compliance requirements include:

  • Making sure the SMSF has no more than 6 members and that all members are trustees.
  • Meeting all administrative and reporting requirements, including lodging returns by the due dates, and appointing an approved auditor.
  • Making sure the SMSF meets the sole purpose test – that the fund exists to give retirement benefits to its members.
  • Meeting the super contributions rules and not going over the contribution caps.
  • Having an investment strategy, carrying it out, and regularly reviewing it.
  • Complying with benefit payment rules when paying funds out of the SMSF to its members.
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SMSF fees

The fees to set up, run, and wind up an SMSF can be higher than the fees you’d pay a larger super fund to manage your super. It depends on your balance and how you choose to manage it.

Many SMSF trustees also outsource some of the time and skills needed to run an SMSF to accountants, lawyers, or other professionals. This is an extra cost on top of the running costs.

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How much does it cost to run an SMSF?

The median total cost to run an SMSF in 2020–21 was $8,611 per year, according to the ATO.

Research by the University of Adelaide shows you need a minimum balance of $200,000 to make an SMSF cost-effective compared to other super funds.

See how this compares to our fees and costs. We’re focused on charging members low fees for the products and services we provide.

What are the alternatives to SMSFs?

If an SMSF sounds daunting, there are other options. We offer build-your-own single asset class options so you can choose your own investments and monitor them.

There are many reasons to join us including:

  • Strong long-term investment returns1
  • Award-winning products and services1
  • Focused on lower fees.
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Winding up an SMSF

There are many things you have to do to wind up an SMSF, like paying any final benefits and sending your last reports to the ATO.

We've put together an SMSF wind-up checklist to make it easier for you.

ART is a super fund registered with APRA – we're a registrable superannuation entity (RSE). We're not a self-managed super fund.

Because we're not an SMSF, we take all the hard work out of managing your super. And you can still take an active role in your investments.

  • You can choose from a range of investment options and build an investment strategy that suits your needs and risk appetite.
  • You don't have to worry about the administration, compliance, and reporting obligations.

That's just the beginning. Compare us and find out how we can make your life easier.

No, we're not a retirement savings account (RSA). An RSA is a type of long-term savings account with a bank, building society, credit union, or other financial institution.

RSAs have to follow the same laws as superannuation funds, but they work differently. There aren't many RSAs left.

Key takeaways

  1. Make sure it’s right for you

    While an SMSF offers you greater control over your super, it’s crucial to weigh this up against the responsibilities, costs, and potential risks involved.

  2. Be confident you have the time and skills

    Managing an SMSF takes time, dedication and financial literacy. You need to be fully committed and know what’s involved before starting.

  3. Talk to the experts

    Make sure you get professional financial advice from an SMSF specialist before deciding to set up an SMSF.

  4. Check your options

    If you want more control over your investments, we have options for all types of investors.

Do super your way

Transfer your super to a fund that does the hard work for you. We take care of close to $300 billion in retirement savings for over 2.3 million members.

Join us today

Already have an SMSF? Learn how to roll over your SMSF to Australian Retirement Trust.

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1. Past performance is not a reliable indicator of future performance. Ratings and awards are only one factor to be taken into account when deciding to invest. Consider the Super Savings product disclosure statements and Target Market Determinations before deciding.