How much does it cost to start an smsf?

How much money do I need for an SMSF?

So, you are considering taking control of your retirement saving and looking at starting a self-managed super fund.  One of the first questions asked is “how much does it cost?”.

The SMSF Association has released new research showing potential SMSF trustees the estimate of fees for various SMSF balances compared with retail and industry superannuation funds (also known as APRA regulated funds).

The costs show estimates of how much you would be looking at paying if you invested in an SMSF or in an APRA fund.

How do costs compare? 

If you have under $100,000:

Generally, you will be paying less in an APRA fund.  However, if you have a solid investment plan, or are looking at investments you generally cannot make within an APRA fund, it still may be worth setting up an SMSF in the long term.

If you have $100,000 to $150,000:

For a simple SMSF with this balance, if you choose a low-cost administrator (such as ourselves) these fees are similar to what you would be paying in an APRA fund.

If you have $200,000 to $500,000:

This bracket is where SMSFs start to really shine – the vast majority of APRA funds will be more expensive than an SMSF now.

If you have over $500,000:

In this range, even the lowest fees in APRA funds work out being more expensive than expected SMSF fees.

This shows that simple SMSFs can begin to become cost-effective with as little as $100,000.  For most people, a $200,000 balance is the turning point where an SMSF becomes cheaper than an APRA fund.

What if I have a spouse or family?

As shown, the higher the fund balance, the more cost effective a SMSF is to run.  You can quickly and easily boost the balance by opening an SMSF with your spouse or family members and rolling each individual superannuation accounts into the one SMSF.  Based on two members you can see the savings stack up much quicker.  Adding in additional members (up to 4) would further speed up the potential savings.

Combined Balance Our estimated Annual Fees – ex GST
(2 members)
APRA regulated fund low fees
(2 members)
$50,000 $1,200 $503
$100,000 $1,200 $863
$150,000 $1,200 $1,216
$200,000 $1,200 $1,566
$250,000 $1,200 $1,942
$300,000 $1,200 $2,301
$400,000 $1,200 $3,013
$500,000 $1,200 $3725

Please note, the APRA figures an average and may be different to the fees you are currently paying. The annual statement from your existing provider will confirm the exact fees you are charged.

 

Other considerations?

An SMSF is not for everyone however, you should also consider your retirement goals and more importantly if you have the desire, time and expertise to take on the role of an SMSF trustee.

As an SMSF trustee you are also responsible for any losses made on your investments as well as ensuring you remain compliant with SMSF legislation.

NEED MORE INFORMATION?

If you would just like some more information. Please do not hesitate to contact us to discuss your situation, get in touch with the Bartley Partners team online or call us on (08) 8338 1033.

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