by Olivia Long

That time of year is fast approaching – 30 June. Hopefully, all SMSF trustees have everything in order, but for those laggards out there here is a last minute checklist to make sure your fund is fully meeting its obligations as we close off on another financial year.

And while your mind is focussed on your SMSF, I think it’s an excellent time to review your retirement savings vehicle from all angles, such as the investment strategy and benchmarking your returns. By now you will have a good idea of how your fund has performed over the past year, so it’s ideal time to sit down with your advisor and/or fellow fund members to review its performance.

It’s my firmly held opinion that all SMSFs should have an internal benchmark by which to measure the fund’s return. Although it’s obviously influenced by the risk trustees are prepared to take – someone in their early 40s and in the accumulation phase is likely to have a far different risk profile to someone in their 70s with capital preservation top of mind – let’s assume a benchmark of the rate of inflation plus 4%.

So did your fund meet that objective? Not just over the past year but over the past five years? Remember you are literally investing for a lifetime, so a five-year comparison against your benchmark is a smart option. If over five years you have under-performed, it’s time for some hard questions. Is the investment strategy right? Is my advisor right for me? Now is the time to act.   

There are a few other tips to remember when it comes to assessing a fund’s performance. How did it perform after fees and taxes? After all, that’s your real bottom line. Make sure any comparison with other funds is against those with a similar risk portfolio. Finally, use the same start and finish dates; getting that wrong can change the performance quite dramatically.

Another useful indicator for trustees is to measure how their share portfolios have performed against the ASX’s benchmark index – the S&P/ASX 200 index. But, remember, beating this index is not an end in itself; if the market is down 25%, will you be happy if your share portfolio is only falls 20%? I doubt it.

Other ways of measuring your fund’s performance is to use superannuation websites that measure performance, such as Morningstar and Chant West.

Although the fund’s performance is what provides trustees with their brickbats and bouquet moments, there are some more mundane measures trustees should consider before 30 June.

Although this list is by no means exhaustive, it’s an indication of what’s on offer. Members aged 60 and above can now place up to $35,000 in super. Previously it was $25,000. After-tax contributions to super are $150,000 this financial year, and if you are under 65 you can contribute up to $450,000 over three years. But remember, if you get your sums wrong, the taxman will want to know why, and, in all likelihood, penalties will apply.   

Some people will qualify for a personal tax deduction to superannuation, so check with your financial advisor. For those people drawing a pension, make sure it’s been paid.  By doing you will ensure any income earned by the fund is tax free.