Couples can benefit more than singles in SMSFs

This Valentine's Day, as you stare across the table at your loved one, you may want to ask if they're ready to join you in a self-managed superannuation fund.

It may not sound as exciting as buying a house together or signing up for a joint bank account, but the benefits could save you thousands in retirement.

According to Rainmaker research, given that much of the administration fees of a SMSF are set per fund, not per member, there are cost savings to be made.

Rainmaker estimates that for a single member with a balance of $500,000 the average total expense ratio (TER) is 0.82%, while for an individual in a two member fund with a balance of $500,000 the average TER is 0.58%.

The cost difference is even more challenging for single members with smaller balances.

There are also simplicity benefits in having two members in a fund, which include; investment strategy, deed, and reduced administration fees.

As added reassurance, you won't be alone in this joint adventure - 70% of SMSFs have two members, and 8% have three to four members. A large proportion of funds with two members are expected to be couples.

Super Concepts' Philip La Greca notes that these benefits are not just for those aged 50 and over, but can benefit younger couples too. Speaking to Financial Standard, Le Greca said that he sees a lot more younger couples establishing SMSFs after 10 to 15 years under the Super Guarantee system.

"With two people under the SG system, the money starts to build up, and as couples reach $250,000 each, there are real savings to be made," he said.

"Super is the second largest asset that most people own, and younger people are starting to focus on it now because the SG system is getting more mature. Super is now just part of families planning for everything these days."

Le Greca notes some additional saving which can be made by couples outside of SMSFs include couple contribution splitting, and tax concession opportunities.

"A less spoken about aspect of the May 2016 budget was the increase in income threshold for the spouse superannuation tax offset," Le Greca explains.

"The income threshold will increase from $10,800 to $37,000, meaning that from July 2017, if a spouse is working part-time or out of the workforce and earning under $37,000, there is a benefit of one spouse topping up the other spouses super contributions to claim an 18% offset. This represents quite a significant increase."

You may however want to consider acting fast, as the government's proposed super changes capping tax-concession contributions at $1.6m will come into effect on July 1 2017.

Read more: Le GrecaRainmakerValentineFinancial StandardPhilip La GrecaSuper Guarantee
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