Some property promoters are aggressively pushing the strategy of forming a self-managed super fund and then using that fund to buy residential property through borrowing.
Some property promoters are aggressively pushing the strategy of forming a self-managed super fund and then using that fund to buy residential property through borrowing. DAN PELED

Your own super fund? Maybe not

ACCORDING to Australian Securities and Investments Commission commissioner Peter Kell, regulation of self-managed super funds is becoming one of ASIC's biggest challenges.

The federal government body is particularly concerned about some property promoters who are aggressively pushing the strategy of forming a self-managed super fund and then using that fund to buy residential property through borrowing.

ASIC chairman Greg Medcraft states "SMSFs are one of our biggest challenges. Education around them is quite poor but we are focusing heavily on correcting this.”

It's great to see ASIC taking action at last because the superannuation pool is now in excess of $1 trillion and the predators are moving in to part you from your precious savings.

And this does raise several issues.

First, is a self-managed fund appropriate for you?

In most cases the answer is a resounding no.

Next, is residential property the best investment for you - in my view there are many better options available. And last, do you really need to borrow at this stage in your life?

This is a complex area but there is a wealth of information available at the ASIC website www.moneysmart.gov.au.

The topics covered there include the costs to set up your own fund, the possibility of losing valuable insurance benefits if you move out of your present fund, the loss of access to certain compensation schemes if you suffer fraud, and, above all, the chance that your own self-managed super fund will not outperform your present one.

Obviously you need to take advice relevant to your own situation.

Just make sure you read the ASIC website in detail before you change your existing arrangements.



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