What Fund To Choose If You Are Winding Up Your SMSF

/What Fund To Choose If You Are Winding Up Your SMSF
What Fund To Choose If You Are Winding Up Your SMSF2019-01-08T05:34:46+00:00

What Fund To Choose If You Are Winding Up Your SMSF


The popularity of SMSFs is understandable. The ability for the members of a super fund to have control over the most important retirement asset, and when in pension phase not have to put up with several layers of bureaucracy to be able to access their funds, are two of the major reasons for this success.

The flexibility in the control that an SMSF provides its members this does come with the responsibilities that trustees have to undertake and, depending on how much accountants and other SMSF service providers are used, varying degrees of work spent in administration.

If the cost of having external service providers outweighs the benefits of keeping the SMSF going a super fund needs to be chosen that will receive the member’s account balances. When it comes to cost most SMSF trustees would choose an industry fund over a commercial fund. This benefit of a reduced cost can however come at the cost of reduced efficiency with regard to member services.

The job of comparing pension accounts offered by different superannuation funds is made extremely difficult because of the different way that fees are charged on member’s pensions accounts. Will unfortunately the job of comparing super funds is made so much harder because in some cases administration fees are buried within investment fees.

The table below, based on a Chant West Pension Apple Check, illustrates the different way funds charge members in pension phase.

Some super funds charge less administration fees and more for investing fees, while others also have advisor fees which makes them the most expensive.

Administration fees

Investment fees

Other fees

Adviser fees

Total Fees

$

$

$

$

$

AustralianSuper Choice Income

828

4,720

0

0

5,548

CBUS Income Stream

744

6,160

880

0

7,784

HOSTPLUS Pension

390

8,080

0

0

8,470

HESTA Income Stream

1,931

3,280

0

0

5,211

MLC MasterKey Alloc. Pension

3,161

6,240

0

4,290

14,321

Asgard AllocPension

3,690

4,240

2,459

0

10,389

CFS FirstChoice Pension Post 11/06/13

1,600

8,480

40

0

10,120

IOOF Employer – Pension Div

4,607

7,200

46

0

11,853

OnePath OneAnswer

0

9,327

320

4,473

14,120

BT SuperWrap

3,105

6,960

814

0

10,879

The table shows a result of a Chant West comparison carried out on May 20, 2015 for pension funds with the growth investment selection of 61% to 80% in growth assets. This investment mix although not what I would recommend for people in pension phase was the only common investment selection for all funds shown.

Investment fees decrease when a balanced or conservative balanced option is chosen. For example if a conservative balanced option is selected the administration fees remain the same but the investment fees for Australian super decreases to $2960, compared to HESTA whose administration fees dropped to $2160, resulting in Australian Super being cheaper overall.