Do You Need an SMSF? Five Questions to Ask Before Setting One Up

You've probably heard someone talk about running their own super fund. Maybe your accountant mentioned it, or you saw an article about investing in property through super. Now you're wondering if you're missing out by staying put.

It's a reasonable question. A self managed super fund, or SMSF, can give you greater control over your retirement savings, but that control comes with real costs, responsibilities and compliance obligations. An SMSF isn't automatically better than an industry or retail fund. The right choice depends on your balance, goals, available time and broader retirement plan.

The Australian Government has also recently outlined proposed measures to strengthen consumer protections for SMSF members and trustees, which makes this a timely moment to ask, is an SMSF genuinely suitable for you, or is it the idea of greater control that appeals?

What is an SMSF?

An SMSF is a private superannuation fund established and managed by its members. It can have up to six members, generally also trustees, meaning you're personally responsible for the fund's investment decisions and for keeping it compliant with superannuation and tax law.

Unlike an industry or retail fund, an SMSF lets you choose your own investments, which may include shares, managed funds, term deposits, cash and property, depending on the fund's trust deed.

But it isn't simply a personal investment account. It's a regulated superannuation trust, with strict rules covering investments, record keeping, reporting, related party transactions and how and when benefits can be accessed.

Why do people consider an SMSF?

People generally explore SMSFs for a few common reasons. Some want more say over where their super is invested. Others want to consolidate several accounts or manage retirement savings alongside a spouse. Business owners sometimes look at an SMSF for its potential to acquire business premises through super, though this involves complex rules and careful assessment first.

These reasons may be valid, but they don't automatically make an SMSF suitable. The real question is whether the structure improves your overall retirement strategy once the costs, responsibilities and risks are weighed up.

Five questions to ask before setting up an SMSF

1. Is your super balance large enough to justify the costs? SMSFs have ongoing expenses that may include accounting, audit, administration, insurance and advice. Say you have $280,000 in super: 1% in fees at your current fund is roughly $2,800 a year, against an SMSF that may cost $5,000 a year to run. These figures are examples only and vary between funds. On a smaller balance, those largely fixed costs can eat into a meaningful share of your savings, so the benefits need to clearly outweigh the extra cost. ASIC recommends at least $500,000 in super before considering an SMSF.

2. Do you really want responsibility for investment decisions? An SMSF gives you control, but control means accountability. Trustees are expected to develop and regularly review a written investment strategy covering diversification, liquidity, risk, insurance and members' retirement objectives, and to keep the fund able to meet expenses and pension payments. Choosing your own investments doesn't automatically lead to better outcomes. It still takes strategy, discipline and an understanding of risk.

3. Do you have the time and knowledge to manage the fund? Running an SMSF is more than picking investments. Trustees are responsible for accurate records, an annual audit, tax reporting, and monitoring contributions and pension payments. Professionals can help, but they can't remove your legal obligations. You remain responsible even when advisers are involved, which is why an SMSF is best viewed as a long term commitment, not a short term experiment.

4. Are you setting one up for the right reasons? An SMSF may not suit you if the driver is following a friend's strategy, chasing a market trend, or buying property without understanding the rules. Fund investments must generally support retirement benefits for members or their dependants, and strict rules apply to:

• Buying assets from related parties

• Using fund assets personally

• Lending to members or related parties

• Borrowing to invest

• Investing in residential property

• Acquiring business premises

Getting these wrong can mean penalties, extra tax, or a non compliant fund. An SMSF should support your broader retirement strategy, not just one investment idea.

5. What happens if your circumstances change? Illness, relationship breakdown, retirement, death or a move overseas can all change what you need from the fund. A well structured SMSF includes succession planning, binding death benefit nominations, and clear decision making arrangements, all far easier to settle before a crisis than during one.

What new SMSF protections are being proposed?

In August 2026, the Australian Government released further detail on proposed measures to strengthen consumer protections across superannuation. For SMSFs, these include:

• Mandatory trustee education before a new SMSF is registered

• Uniquely identifiable bank accounts for SMSFs

• Stronger requirements around written investment strategies

• Greater visibility for trustees comparing SMSF performance with APRA regulated funds

• A proposed rise in the annual SMSF supervisory levy from $259 to $295

These proposals are meant to protect SMSF members from fraud, scams and financial abuse. They don't mean SMSFs are unsuitable, but they reinforce that running one is a serious responsibility.

So, do you need an SMSF?

The answer isn't the same for everyone. Unless you have a compelling reason to have an SMSF, an industry or retail fund remains simpler and just as effective. Before deciding, compare the options and consider how the structure fits your wider financial position.

Want to discuss your options, book a free 10-minute Discovery Call with Hunter FP at hunterfp.com.au.

Frequently asked questions

Is an SMSF better than an industry or retail super fund? Not automatically. An SMSF may suit people who want direct control and accept the added responsibility. For many people, an industry or retail fund remains simpler and more cost effective.

How much does an SMSF cost to run? Costs vary with the fund's size, investments and complexity, and commonly include accounting, administration, audit, tax and advice fees.

Can an SMSF buy property? An SMSF can invest in certain properties. Strict rules apply, particularly around borrowing, related parties and personal use, so get advice before proceeding.

What happens if an SMSF trustee dies? This depends on the trust deed, succession planning and any binding death benefit nominations in place. These arrangements should be reviewed regularly as part of your broader estate plan.

Figures referenced in this article are current as at the date of publication and may be subject to change.

This article contains general information only and does not take into account your personal financial situation, needs or objectives. Before acting on any information, consider whether it is appropriate for you and seek professional advice.