Advantages & Disadvantages of Self Managed Superannuation Funds

Self managed superannuation funds (SMSF) are not suitable for everyone. Their appropriateness will depend upon the monies available for investment, and the skills and abilities of the proposed trustees/members.

The table below summarises the advantages and disadvantages of self managed superannuation funds compared to public offer/industry funds.

Should you require specific information in relation to the suitability of a self managed superannuation fund to your situation, please contact McPherson Investment Consulting Pty Ltd.


  1. Control
    You have complete control over the fund's investments, however, you must develop and maintain an appropriate investment objective and strategy.
  2. Flexibility
    Control of your fund means you're able to invest in a range of assets incluidng bank deposits, direct property, shares, managed funds and pooled investment trusts.  You're also able to switch or modify those investments as you see fit.
  3. Control Over Design and Operation
    As members are generally the trustees of the fund, you have a degree of control over the rules of the fund and how it operates.  For example, the fund can run both accumulation and pension phases.  Specific rules about the payment of benefits can also be introduced, for example, restricting when a child can commute a pension.
  4. The Fund Can Go on After Your Death
    The fund can provide benefits to you, your spouse and even your children.  This means that the fund can continue after your death which can allow for many estate planning benefits.
  5. Cost Savings
    Generally, the cost of managing a self-managed superannuation fund does not increase as your super investment grows.  So the greater the account balance, the more cost effective the SMSF is.  Also, SMSF's do not have the same prudential regulation and do not have to be licensed.
  6. Tax Concessions
    The fund can provide tax concessions such as the deferral of lump sum tax in the pension phase.  There are also opportunities to use credits from franked dividends to reduce the 15% tax rate.
  7. Advantages for Small Business
    Typically many small business owners are able to utilise super rules which permit SMSF's to invest in business real property either directly or through non geared unit trusts or warrant trusts and lease back the property to a related party.


  1. Responsibility
    All decisions and responsibilities associated with managing the fund rest with you as trustee. In addition, all superannuation funds have to comply with certain rules and certain deadlines. As trustee, you're responsible for making sure the fund meets all legislative requirements on time - so you need to keep up-to-date. You can be penalised for breaches of the legislation.
  2. Limited Ability to Diversify Investments
    Although you are generally able to invest in a greater range of assets, you may not have sufficient money in the fund to diversify across them all. You also need to monitor the investment performance of the fund. You could simplify these tasks by investing in managed/pooled investments.
  3. It Can Be Expensive
    Depending on the types of investments in the fund or the administration and consulting assistance you receive, it may be expensive to maintain the fund.
  4. No Access to Superannutaion Complaints Tribunal
    As a member of a SMSF you are not able to bring complaints or disputes to the Superannuation Complaints Tribunal.  Instead you must have any matters heard by the Courts which may become expensive and result in delays.