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Self-managed super fund (SMSF) or super fund

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At a glance

There’s two main ways you can manage your super or retirement money.

You can put it in a traditional super fund (like ours), which is regulated by the Australian Prudential Regulation Authority (APRA). Or you can put it in an SMSF, which is run by you and regulated by the Australian Taxation Office (ATO).

Having an SMSF gives you direct control over your super money, which also also means you’re directly involved in making decisions about the fund. Plus, you’re responsible for things like paying tax, choosing investments, managing insurance, and staying legally compliant.

SMSFs vs super funds

Let’s break down the core differences between SMSFs and industry super funds.

 SMSFSuper fund

Cost

  • Set up costs.

  • Fixed annual costs

  • Can cost $2,000-$6,000 in accounting fees alone.*

  • No set up fees (usually).

  • Annual fees charged as a percentage of your super, and can be capped.

Investment knowledge

  • Typically needs high investment and finance knowledge.

  • If your SMSF doesn’t perform well, it falls on you and your investment decisions.

  • Typically needs basic investment and financial knowledge.

  • You’ve usually got a team of investment experts making decisions for you.

Admin and regulation

  • SMSF trustees spend over 100 hours a year managing their fund, on average.#

  • You’re fully responsible for staying compliant with regulations and the law.

  • Requires little to no personal admin.

  • Traditional super funds are usually regulated by external third parties, like the Australian Prudential Regulation Authority (APRA) and the Australian Financial Complaints Authority (AFCA).

Risk

  • You typically take on all responsibility, costs, and risks.

  • These are usually higher for an SMSF compared to a super fund.

  • If your SMSF is a victim of theft or fraud, you’re not entitled to any compensation.

  • Your super fund handles admin, compliance, and investment management for the options you choose.

  • When your money is in a super fund, it’s protected to some extent by APRA and the Australian Securities and Investments Commission (ASIC). That means you could get compensation if you’re a victim of fraud or theft.

Insurance premiums

  • Insurance premiums can be higher compared to super funds.

  • Super funds can negotiate premiums and buy in bulk across millions of members, meaning insurance premiums are often lower than SMSFs.

Flexibility

  • Highly flexible – it’s your SMSF, you can choose how you want to run it.

  • A level of flexibility, with a broad range of options to let you invest your money how you like.

  • Some super funds, like ours, also offer low cost indexed options.

Investment opportunities

  • A broad range to choose from.

  • Large-scale projects like property development, infrastructure, and private investments may not be available.

  • A broad range to choose from.

  • Larger super funds can usually invest in large-scale projects like property development, infrastructure and private investments.

What a super fund gives you

Most Australians choose a traditional super fund because it offers access to professional experts and requires far less time, admin, and responsibility. You can choose investment options or portfolios that suit you, while your fund takes care of investment management, administration, and compliance.

This means you can invest and diversify without the extra costs, risks, and obligations involved in running your own SMSF.

Some of the benefits of using a regular super fund include:

  • Generally lower fees (depending on account balance) and simpler management.

  • Investment experts look after your money.

  • A range of professionally managed investment choices to suit your needs.

  • The ability to check how your money is doing anytime.

  • Access to educational resources and events.

  • Expert guidance.

  • Less admin and paperwork.

SMSFs in action

See how SMSFs compare to super funds in different scenarios.

More to enjoy in retirement

Jeremy is 45 years old and is invested in our MySuper Lifecycle default approach. He’s thinking about switching from Aware Super to an SMSF.

Based on his current balance of $167,000, if Jeremy stays with Aware Super his projected retirement balance is $633,000. That's from his employer contributions and returns he gets over time – he doesn’t have to spend any extra time or money on growing his balance.

If he switches to an SMSF, his projected retirement balance is $494,000.

That means he’ll have $139,000 more in retirement if he stays with Aware Super.^
 

Switching to SMSF

This example is for illustrative purposes only and is not a guarantee of future outcomes.

A split decision

Brenda is 45 years old and wants to open an SMSF, plus keep her Aware Super account to maintain her insurance cover. She has to decide how much of her $167,000 balance to keep in her super, and how much to move into her SMSF.

If Brenda splits her balance evenly between the two, her projected retirement balance is $528,000. If she moves 90% of her money into her SMSF and keeps only 10% in her Aware Super account, her projected retirement balance is $494,000.

That’s a difference of $34,000, meaning the 50/50 split leaves Brenda better off at retirement, plus lets her keeps her insurance cover through Aware Super.^^
 

Partial rollout SMSF

This example is for illustrative purposes only and is not a guarantee of future outcomes.

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FAQ

An SMSF is a super fund you run yourself, with up to six members. As a trustee, you make all the investment and compliance decisions, giving you both full control and full responsibility.

An industry or retail super fund is a large, professionally managed fund run by a trustee for many members. You get a wide range of investment choices and the benefit of professional oversight, but with less direct control.

The choice comes down to whether you want the responsibility of managing everything yourself, or the convenience of a professionally managed fund.

The main disadvantages of an SMSF are the time, cost, and responsibility involved. As a trustee, you’re personally responsible for compliance and all investment decisions, and penalties can apply if you don’t meet the rules.

SMSFs can be more expensive to run for smaller balances, and they may not offer the same protections as large funds. You may have less protection against fraud or theft, plus moving from a retail or industry fund could mean losing access to some insurance cover and AFCA.

Of course, there are advantages to SMSFs as well, such as the additional flexibility and control over your money. It’s important to weigh up both sides to make the right decision for you.

The 5% SMSF rule, also called the in-house asset rule, limits an SMSF from holding more than 5% of its total assets in “in-house assets.” That includes investments, loans, and leases involving members or related parties.

Trustees must test the value of these assets at the end of each financial year. If the 5% limit is exceeded, they need to create and implement a plan to bring the level of in-house assets back under the cap.

Visit the ATO for more information on SMSF investment restrictions.

It depends on your circumstances.

A traditional super fund is usually simpler and lower cost, especially for smaller balances. Your money is professionally managed, you can choose from a wide range of investment options, and there’s very little admin for you.

An SMSF gives you more responsibility and a broader set of investment choices, but it also comes with higher costs, more complexity, and strict compliance rules. SMSFs are generally only suitable for people with larger super balances who have the time, financial knowledge, and resources to manage it themselves.

Yes. You can wind up your SMSF balance into a regular super fund, but the transfer must be in cash. This means any non-cash assets in your SMSF, such as property or shares, need to be sold before the rollover, and there may be taxation impacts and other costs involved in that process.

We’ve listed all the steps involved in winding up your SMSF. It’s a good idea to get help or advice before you make a decision.[AD1][AD2]

An RSA is a deposit account offered by some approved financial institutions (like banks and credit unions). The financial institutions manage your money for you, and you don’t have any say in your investment options.

An SMSF is a fund run by you and up to five other trustees. You have full control over your investment options, but you also have complete responsibility – including for the admin, legalities, costs, and risks involved.

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[AD1] Advice provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super. 

[AD2] Members can get advice about their Aware Super accounts at no extra cost, or advice on their broader needs for a fee.

* Morningstar article, 2024. Source: How much does it really cost to run an SMSF?

# Moneysmart research, 2026. Source: https://moneysmart.gov.au/how-super-works/self-managed-super-fund-smsf

^ Example is based on an average Aware member aged 45 with a $167,000 balance, earning $120,000 p.a., retiring at age 67 and receiving 12% SG. Results are shown in today's dollars (deflated using AWOTE 3.7% p.a.) and rounded to the nearest $100. Aware fees are assumed to be 0.15% p.a. (capped at $750 p.a.) plus a $52 annual fee, while SMSF fees are assumed to be 1.3% p.a. based on ATO data for funds between $200,000 and $500,000. Aware investment returns are based on the MySuper Life Cycle option. SMSF returns are based on ATO asset allocation data and corresponding Aware asset-class return assumptions. Returns are net of tax. CPI is assumed to be 2.5% p.a. No insurance, LISTO or Government Co-Contributions are included.

This example is for illustrative purposes only and is not a guarantee of future outcomes. Results are based on current laws and tax rates as at 1 July 2026 and may change. Actual investment returns may differ, including being negative, and higher or lower returns and inflation will affect final balances.

^^ Example is based on an average Aware member aged 45 with a $167,000 balance, earning $120,000 p.a., retiring at age 67 and receiving 12% SG. Results are rounded to the nearest $100 and shown in today's dollars (AWOTE 3.7% p.a.). Scenarios assume that 100% of SG contributions are paid into the member's SMSF account. Aware fees are assumed to be 0.15% p.a. (capped at $750 p.a.) plus a $52 annual fee, while SMSF fees are assumed to be 1.3% p.a. based on ATO data for funds with balances between $200,000 and $500,000. Aware and SMSF investment returns are based on long-term assumptions and are net of tax. CPI is assumed to be 2.5% p.a. No insurance, LISTO or Government Co-Contributions are included.

This example is for illustrative purposes only and is not a guarantee of future outcomes. Results are based on current laws and tax rates as at 1 July 2026 and may change. Actual investment returns may differ from assumptions, including being negative, and final balances will vary.