Investments, Superannuation

Bigger funds ideal pooled investment vehicle

six member pooled investment

Six-member SMSFs could be viewed as highly beneficial pooled investment structures by individuals, whether or not they are part of the same family.

Six-member SMSFs could be beneficial vehicles for both related and unrelated individuals to consider a pooled investment and improve their retirement outcomes, a specialist SMSF compliance and documentation firm has said.

According to SuperCentral, the move to raise the member limit for SMSFs from four to six could allow larger-member SMSFs to be viewed as a highly advantageous pooled investment structure by individuals, whether or not they are part of the same family.

“An SMSF is looked upon primarily as a family super fund.  However, the SMSF is by nature a trust fund. It can be advocated that the six-member SMSF with an enhanced capital base is also ideal as a structure for a conglomerate of individuals to pool together capital for tailored investments and, prospectively, better retirement outcomes,” SuperCentral said.

“The investments will be subject to superannuation and other relevant laws, notably the Superannuation Industry (Supervision) Act investment rules and the sole purpose test.”

The firm pointed out there were several advantages afforded to SMSFs that could be tapped into by individuals considering a larger-member SMSF as a potential collective investment structure, including concessional taxation and limited recourse borrowing.

It also highlighted flexible investments and asset protection as additional benefits provided by SMSFs, making them a good option for those considering pooling their investments with others in order to improve their retirement outcomes.

“Six-member SMSFs allow a greater chance for the fund to amass capital, achieve better economy of scale and move into comparatively innovative products, as well as maintaining blue-chip investments, subject to the investment strategy,” it noted.

Last month, in its submission to the Senate Standing Committee on Economics regarding the committee’s inquiry into the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020, the SMSF Association said the move towards six-member SMSFs would provide greater flexibility and choice without compromising the integrity of the sector.

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