Money
Issue No. 21 - February/March 2005
DIY Super
Increasing popularity of self-managed superannuation funds
by Tony Catt
The introduction of super fund choice from July 2005 should significantly increase the popularity of self-managed superannuation funds.
Already, self-managed super is enjoying remarkable growth with 2500 funds being established each month and the total number of funds exceeding 300,000.
Many people currently locked into large funds chosen by their employers are likely to exercise their new powers under fund choice to switch to self-managed or do-it-yourself super.
The latest statistics released from the Australian Prudential Regulation Authority show that self-managed funds hold $136 billion of the almost $600 billion in Australian superannuation savings. This is an increase of $8 billion in just three months. The assets of self-managed super funds are second in value only to retail super funds.
Australia's superannuation savings are divided between retail funds ($201 billion under management), self-managed funds ($136 billion), government funds ($120 billion), industry funds ($66 billion) and corporate funds ($56 billion). Another $17 billion is held in various other ways such as annuities and life insurance reserves. (The statistics do not include unfunded amounts in government super funds.)
DIY funds appeal most, of course, to those who want maximum control of their retirement savings during the accumulation and retirement phases. DIY super also opens some exciting opportunities before and during retirement for managing taxation, asset protection, interesting property assets (such as the premises of the family business) and estate planning.
However, self-managed funds are not for everyone. Before switching to a self-managed fund, you should discuss the issue with your financial planner.
There are plenty of matters to consider. Are you prepared to devote the time required to looking after your own fund? Are you willing to gain professional advice on asset allocation and investment selection? Are you aware ...
