How much super do you need to set up an SMSF?

The amount of money you should have in super to make it worthwhile setting up your own self-managed super fund (SMSF) is a contentious issue.

Over the years there has been much discussion of the issue by the Australian Taxation Office (ATO), which administers SMSFs, the Australian Securities and Investments Commission (ASIC), which regulates the financial industry, and the Productivity Commission. The  consensus was that having at least $500,000 in super is a good yardstick, but this was challenged by the SMSF sector which eventually commissioned its own research.

The latest research by the University of Adelaide for the SMSF Association found SMSFs with $200,000 or more in net assts can be competitive with industry and retail funds both in terms of cost and investment performance. The February 2022 report – Understanding self-managed super fund performance – was based on analysis of over 318,000 SMSFs for the three years to June 2019.

These findings complemented earlier research by Rice Warner, also for the SMSF Association. The Cost of operating SMSFs 2020 report also found SMSFs with at least $200,000 in assets were cost competitive on average. But it went further, comparing SMSFs of different sizes and complexity with retail and super funds on a like-for-like basis, with some surprising results.

In this article, we’ll provide you with the latest statistics and perspectives on this vexed issue to help you make your own informed decision.

Allow for set-up costs

One of the issues that skewed previous attempts to quantify costs was that there was no breakdown of one-off set-up costs and ongoing expenses associated with operating your own SMSF. This meant set-up costs incurred in the first year of operation only, skewed the average for all funds.