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In This Chapter

▶ Taking control of your super – the government’s grand plan

▶ Testing your DIY super resolve – ‘Super 6C Challenge’

▶ Fulfilling the SMSF membership rules

▶ Steering your DIY super CART

▶ Building, and growing, a super duper investment portfolio

▶ Planning for your tax-free retirement

T aking control has never been so popular. One of the most talked-about trends in superannuation is the spectacular growth in the number of DIY super funds – 534,000-plus funds and counting.

Although each DIY super fund (officially known as a self-managed super fund) can have no more than four members, these humble structures now control nearly a third of all superannuation wealth in Australia – roughly one in every three super dollars is held in a DIY super fund! Even more remarkable, industry researchers DEXX&R report that DIY super funds control around two-thirds of all super money financing retirement pensions. (A pension is an income stream payable from a superannuation fund.)

Survey after survey confirms that the number one reason motivating an individual to set up a DIY super fund is the desire for control. Of course, other reasons for starting a DIY super fund stand out as well, such as cost considerations and dissatisfaction with the investment performance of an individual’s existing large super fund. Typically, a DIY super trustee wants to take control of their super savings and run their own pension in retirement. As a trustee, you’re responsible for looking after your retirement savings and ensuring your DIY super fund complies with the super and tax rules, and the investment rules.

This chapter gives you a panoramic view of the world of DIY super, including where DIY super fits into the government’s retirement policies. I set you my ‘DIY Super 6C Challenge’, which enables you to stress-test your decision to run your own super fund. I explain the two types of DIY super funds, and I outline the main tasks that you take on as a DIY super trustee. As a special finale to the chapter, I present you with your own retirement super star – a guide to the exciting tax-free super world that you enter in retirement.

The official term for the most popular DIY super fund (a super fund with four or fewer members) is a self-managed super fund (SMSF) and the terms ‘DIY super’ and ‘SMSF’ are used interchangeably in this book. I explain this terminology in more detail in the section ‘What Does a DIY Super Fund Look Like?’, later in this chapter.