1 July 2021, Self Managed Superannuation Fund rules changed to allow up to 6 members (instead of the previous limit of 4).
So, what does this mean? Well for a lot of people it will mean the whole family can be members of the same fund, make joint investment decisions, help the children increase retirement savings and various other benefits. On the surface, this sounds like a great option to increase your wealth, however, there are many issues that could arise when there are differences in members’ ages. The main concerns are younger family members may lack interest and skills compared to their parents who may be close to retirement or the expected difference in investment choices by members.
Before making any changes, the following should be considered:
Pros
· Bigger families can share a single fund.
· Younger members can be introduced earlier (no need to wait until parents
get older).
· Larger scope to allow for a broader range of investments.
· Additional capital in the SMSF may allow greater access to assets that where
otherwise unattainable.
· Increased ability to meet Residency Requirements, when one or more members
travel overseas for a prolonged period, saving in administration costs.
Cons
· Highly likely the investment strategy will be more complex.
· The funds Deed may need to be updated to allow for additional members.
· Increased risk of dispute among members.
· Expanded Administration burden.
If you are considering increasing the number of members in your fund or the establishment of a 6 person superannuation fund, please contact our office on 03 9584 2277 for further discussion.