How Much Does It Cost to Run a Self Managed Super Fund?

The cost of running a self managed superannuation fund will vary depending on the amount of work involved in preparing the tax returns and the level of advice you need to maintain it throughout the year. 

The greater the balance you have in super the greater the level of management, care and reponsibility you may have, so the costs will tend to be higher versus a low balance, low cost super fund. However in either case the same Trustee requirements apply (see the Trustee guide).

Recent research by Rice Werner shows the ranges of fees payable to run and administer a SMSF (accumulation and pension phase) in the table below:

Source: Rice Werner Cost of Operating SMSF's May 2013.

To further illustate the difference the table below shows a comparison of what administration fee's you may pay in a retail masterfund vs a SMSF:

Super Balance

Ongoing Master Fund

Management Fee

(Average of 2%)*

 

Ongoing SMSF Admin and Accounting Fee **

$50,000

$1,000

$1,100

$80,000

$1,400

$1,200

$100,000

$2,000

$1,500

$200,000

$4,000

$1,800

$400,000

$8,000

$2,200

$500,000

$10,000

$2,500

$1,0000,000 and above

$20,000 +

$3,300+

*Master fund management fee?s can range from 1-4% per annum so we have taken an average of 2% and SMSF admin fee?s can range from $800 to $10,000 per annum. **Typically SMSF fee?s can be fixed amounts so you can clearly determine the cost of management regardless of the balance of your superfund, higer fees may appy for larger numbers of transactions and more complex structures . The above fees are estimates only and exclude GST. Other fees that may apply are the ongoing cost of investments and the cost of financial advice.

Note: The above fees do not include the establishment costs of super which may vary depending on the structure and strategy of your super fund, this can range from $990 to $3,300. Structure refers to the type of trustees (individual or corporate), custodian trusts, legal agreements and other trustee arrangements. Financial advice costs would also be an additional cost.

To understand more check the value of your latest super balance to see if you have enough to warrant setting up a SMSF. Find out what you are paying in contribution fees, ongoing fees and if there are any exit fees. Typically there are no ongoing contribution fees with a self managed super fund.

Other than looking at just the fee's a deeper analysis should be done by your financial adviser or accountant to find out what options are available to you. Remember the skill of a good plumber with years of experience is to know where to fix the leak and how to fix it . An accountant or financial planner with years of experience can show you how to reduce tax and use strategies that will increase your final retirement balance, so make sure you consider all of whats on offer before you just focus on the price as you could be missing out on significant financial benefits.

Can I get someone else to manage my SMSF?

The short answer is yes, comprehensive administration and advice services are available to SMSF's that include tax, compliance, investment strategy, investment platforms, financial advice, tax advice and estate planning. Rice Werners latest research on the SMSF sector in the table below illustrates the range of fee's payable for a full administration service.

For a free no obligation expert opinion & appraisal of your superannuation fund click here.

Learn more by going to the Comprehensive Guide To SMSFs >>

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