How do superannuation funds operate

Contact us to find out how you can boost your super savings for retirement. Read on to find out how to protect your small business against cyber threats. As a small business in Australia, how you manage shipping, fulfilment and returns has the potential to make or break your venture. Read our tips on optimising your processes. There are several ways you can shave your operational costs, improve cash flow and avoid the anxiety of being unable to pay your creditors - and this does not have to involve letting go of your staff.

Read our top 9 tips. In retail super funds, the trustee is often an approved trustee company registered with APRA. Trustees are not required to be experts in every aspect of running a super fund, but they have final responsibilty for its performance and the actions of any professional experts they hire.

Investment management firms usually concentrate in a particular market such as Australian shares, international property, unlisted assets or US bonds. They are paid for their specialist knowledge about these markets and the trustee measures their results against clear investment benchmarks or indexes to ensure they are performing.

A large super fund will select a range of investment managers, with some using up to 40 or 50 managers focussing on different markets.

Specialist fund administration companies help the trustee board administer your super fund and often have responsibility for its call centre and member contact services. Administrators also help ensure your fund continues to comply with the ever-changing legislation and regulations governing super funds in Australia.

An administrator is responsible for receiving and recording employer and member contributions into the super fund, issuing annual reports and compiling member statements. The administrator usually answers most of the queries and emails received from fund members. There are thousands of investment managers around the world and asset consultants are experts in understanding the differences between them. The insurance cover you receive through your super fund is not administered and provided by your fund, but by the specialist life insurance company selected by the trustee.

Life insurers specialise in death, total and permanent disability TPD and income protection insurance. They assess any claims you make against your insurance cover if you hold it through your fund and decide whether or not you are eligible to be paid. This decision is not made by the trustee. Custodians help protect the fund from fraud and questionable investment transactions. If an investment fraud occurs, the custodian is held responsible, as avoiding this is one of its key tasks.

For more information, read SuperGuide article What are unit pricing and crediting rates and why do they matter? Like any large financial institution, the financial records of big super funds are regularly audited by one of the large accounting firms that specialise in auditing companies.

You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement PDS or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers.

A properly structured self managed superannuation fund safeguards your assets in the event your superannuation outlives you, so your family and other members benefit — not a large life company! The people who do take the time to understand the rules and the constraints and stay within them rarely encounter problems. Also there are specialist firms that can guide you every step of the way from the setup to conversion to pension to paying out benefits when a member dies, and many can also do the administration for you if required.

Disadvantages You will need to pay ongoing attention to investments, the economy and changes in legislation. The potentially higher costs of self managed superannuation funds with low capital may make the fund uneconomic when compared with the net return from an account in a larger superannuation fund. The members are also the trustees, which means they have additional responsibilities and the requirement to comply with legal requirements.

If the fund ever becomes non-complying, for example, if there is a serious breach of investment rules with related parties, it can lose its tax concessions. Need for continuing attention.