SMSF Audit on Types of Super Funds
A super fund is simply a long term savings vehicle which has a range of very generous tax concessions, including when money goes in, while it is invested, and when it comes out as an income stream. The flip side is that there are restrictions on when you can access your money, to ensure that it’s kept safe and sound until retirement (or in the event of death or disability). You may choose what type of fund to invest in; there are two (2) major types of super funds; the accumulation funds and defined benefit funds.
It is the Governments way of trying to get us to save as much as possible for retirement, and reduce the future strain on the Age pension system. Please note that for a super fund to receive the generous tax concessions available, it must be a complying super fund, which means that it strictly complies with all the relevant laws set down under the SIS act and any prudential standards set by the regulators.
In choosing the right fund for you; you’ll need to understand the types of fund available according to standards, there are two major types;
Accumulation funds - it is a type of fund where the final benefit is simply the final account balance. That is, the sum of all the contributions made, plus investment earnings, minus tax and fees over the years. This is the main type of Super fund in Australia.
Defined benefit funds – it is a type of fund where the final benefit is based on some sort of formulae, such as a multiple of final average salary. These are mainly found in the Government super funds for public servants.
The following are sub-groups of super funds;
Corporate funds
Public sector funds
Industry fund
Retail funds
Wrap Super Platforms
Small APRA funds
DIY / Self Managed Super Funds (also known as SMSFs)
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