Cost of a self managed superannuation fund

Wanting to get more control of your superannuation and wondering what its costs to have your own self managed superannuation fund (SMSF)?

There are several components to the cost of running an SMSF, including:

  • Investment management fee
  • Accounting fee
  • Audit fee
  • ATO supervision levy
  • Professional fees for advice, administration and anything else you choose to outsource

The Australian Taxation Office (ATO) have just released a statistical overview of SMSFs for 2009-2010 that reveals some average costs based on fund size.

Graph source: ATO Self-managed superannuation funds: A statistical overview 2009-10, Graph 21

You might think your retail superannuation fund is expensive. But most modern off-the-shelf superannuation funds have total expenses (administration and investment) under 2% per annum. In fact most of my clients are in accounts where this fee is around 1% p.a. or less.

As you can see from the ATO’s graph, the average SMSF needs at least $200,000 in funds before the fee drops under 2% per year. And the average operating cost doesn’t drop under 1% p.a. until the balance is over $500,000.

Given that in Australia the average superannuation balance is well under that level you can see that a SMSF is not cost effective for most Australians.

So if you are considering a SMSF you need to have a much better reason than saving money. Read this article for an insight into when a SMSF may be appropriate.

Author: Matt Hern

Certified Financial Planner professional, Matt Hern has three times been awarded as one of Australia's Top 50 Financial Planners by The Australian Financial Review Smart Investor. He is passionate about guiding you on the right financial choices to achieve what you really want. Matt Hern is an Authorised Representative of Charter Financial Planning Limited AFSL 234665. All information is general advice only.