Generations X and Y are increasingly taking on the challenge of managing their own super investments, but there are important questions to ask before setting up your own superannuation fund.
According to Bill Adams, National Australia Bank’s national manager for agribusiness wealth, there is a big shift in thinking occurring among younger farmers, particularly in the 34-45 age bracket.
“We’re seeing an exciting and growing trend of younger farmers thinking about and planning for retirement,” Mr Adams said.
“Young farmers want to have a retirement plan with a clear retirement date in mind. It’s a different mindset to that of their parents’ and grandparents’ generation, who’ve tended to retain their working involvement in the family farm.”
“More customers are using self-managed super funds to buy property within the business, but they are also looking beyond the farm gate with investments in commercial and residential property and the equity market.
“The benefits of a self-managed super fund (SMSF) include the control over your investment, tax benefits, lower fees and the fact that a SMSF is a pension and accumulation fund in one. You can commence a pension and continue contributing to the same SMSF.
There are currently $506 billion in assets managed under SMSFs and the average fund balance is $950,000.
“SMSFs however are not for everyone, and I strongly recommend that anyone considering this option speak to their financial planner so they fully understand their responsibilities,” Mr Adams said.
An agribusiness financial planner should be your first port of call if you are thinking about setting up a SMSF as you will need to seek adequate advice and guidance. Mr Adams also recommends that farmers considering this option ask themselves the following questions:
- Do you have sufficient superannuation knowledge and investment skills to manage your own SMSF or are you prepared to work with a financial planner or adviser to develop this knowledge? Consider your options and seek professional advice
- Do you have sufficient time to put into managing your fund?
- Do you understand the risks and laws? If you set up an SMSF you are responsible for all decisions made, even if you receive professional advice. As the title suggests, these funds are ‘self-managed’ and you are responsible for ongoing compliance.
- What is your succession plan? A SMSF will allow you to legally pass on benefits to beneficiaries in the event of a member’s death.
Source: NAB Agribusiness View. Visit nab.com.au/agriview to find contact details for your nearest NAB agribusiness manager.