The world of finance comes with many acronyms. Particularly when you’re looking at your superannuation options, understanding the long list of acronyms you’ll come across can take some time.
If you’ve heard of APRA funds, and are wondering what they are, read on. We provide a brief guide on what an APRA-regulated fund is and how they differ from self-managed superannuation funds (SMSF).
What is an APRA super fund?
Any superannuation fund that is regulated by the Australian Prudential Regulatory Authority (APRA) is considered an APRA super fund. Generally speaking, unless you have a self-managed superannuation fund, your super fund will be an APRA fund.
If you’re an employee, chances are you have an APRA-regulated fund, such as an industry or retail fund, that your employer makes contributions into on your behalf for the purpose of saving for your eventual retirement.
What are the different types of APRA-regulated super funds?
There are many different types of APRA-regulated superannuation funds. Some of them include:
- – Public offer funds
- – Approved deposit fund
- – Pooled superannuation trust
- – Non-public offer
If you’re interested in learning more about the definitions for the different types of APRA-regulated funds or finding out what type of fund you hold, you can use the Super Fund Lookup tool provided by the Australian Government via the Australian Taxation Office.
Who does Apra regulate?
The Australian Prudential Regulatory Authority (APRA) oversees a large part of the superannuation industry such as banks, credit unions, building societies, general insurance and reinsurance companies, life and private health insurers.
Aren’t all super funds considered a pooled superannuation trust?
While it is true that with most superannuation funds, each member’s investment is pooled with the money invested by other members of the fund, a pooled superannuation trust is a separate trust type.
What does the Australian Prudential Regulation Authority (APRA) do?
APRA is an independent statutory authority responsible for supervising various financial institutions in Australia, including in the superannuation industry.
APRA is therefore responsible for ensuring that superannuation funds comply with the relevant law that applies to them, such as the Superannuation Industry (Supervision) Act 1993 and other applicable legislation, such as that relating to Retirement Savings Accounts.
What is a self-managed super fund?
As the name suggests, a self-managed superannuation fund (SMSF) is a super fund where you are responsible for managing the fund. SMSFs are regulated by the Australian Taxation Office (ATO).
The main drawcard of SMSFs is that they offer more control and flexibility over the investment decisions for your retirement savings. Many investors are drawn to SMSFs due to being able to purchase a residential property with the fund.
What’s involved in having your own super fund?
As you might expect, SMSFs do come with a high level of responsibility. Before you can enjoy the benefits of an SMSF, there are some set-up steps that you’ll need to take.
These include (but aren’t limited to):
- – Choosing a trustee structure, whether a corporate trustee or choosing individual trustees to manage your fund.
- – Decide who’s to be a member of your fund (there can be up to six members of an SMSF in Australia).
- – Putting any personal insurance you may need in place (for example, life insurance or income protection).
- – Registering the fund with an Australian Business Number (ABN).
- – Forming a trust deed.
- – Setting an investment strategy to determine how your assets are to be invested.
Ensuring your fund complies with all superannuation and tax law can be a big job. It’s why the ATO recommends engaging with finance professionals to help with self-managed super fund management.
Looking to purchase property within your own superannuation fund?
At SMSF Loan Experts, we are experienced professionals in assisting SMSF owners in setting up the correct lending structure to take control of their retirement investments. We also work with other financial and legal practitioners to help you establish and manage your self-managed superannuation fund.
If you’re looking to seek professional guidance to confidently invest in direct property within your SMSF, contact the team at SMSF Loan Experts.
