Australia Managed Funds
Many pre-treatments were stung in 2008 and had to continue working much more than planned. If necessary, a fund must be able to convert certain assets into cash in the short term. If a fund has most of its real estate investments and a member dies or decides to retire, it may take a long time to convert those investments into cash to pay the benefits. One way to approach this is to have a certain percentage of liquid assets in the fund to allow flexibility.
While a simple statement that trustees have considered and decided it is not necessary is likely sufficient, documents supporting why this is the case will provide more legal support if the first statement is ever questioned.
Please note that your regular SMSF advisor may not be a recognized and legally competent financial advisor to assist you. They can guide you where to get resources, such as an investment strategy template. Be careful when getting standard investment strategy templates as they may not meet the super rules. They must be properly adapted to the specific circumstances of their fund, as discussed above, and regularly reviewed as required by super rules. However, the wide investment ranges between 0 and 100% in a wide range of assets do not reflect sufficient attention to meet the requirements of the investment strategy.
As your own SMSF manager, you can determine where your pension savings are invested. Compared to “standard” pension funds, you have a wider choice of investment options, including listed shares, bonds, listed investment companies, listed funds and direct ownership. You can also transfer listed shares and managed personal real estate funds directly to your SMSF, in addition to being able to own “commercial real estate”. You can design your own investment strategy, actively manage the investment range and adjust your portfolios as markets change. Once you have developed your fund’s investment objective, you need to develop an approach to achieve those goals.
The investment strategy is just as important as writing SMSF confidence. It is not enough for a strategy document to say that you can pay a pension when it ends when the fund is invested in illiquid assets and has no access to any cash flow. For example, an investment strategy of a retired manager could indicate how that fund plans super fund administrators to sell some illiquid assets and invest them in something more liquid, such as shares, to prepare for ongoing retirement payment requirements. The percentage or dollar distribution of fund assets invested in each investment class should support and reflect your articulated investment approach to achieve your retirement goals.