Australia created a pension system called the "Superannuation Guarantee" or "Super" in 1992. Under this scheme employers must make contributions into a registered Superannuation Fund on behalf of their employees. Currently the law requires a contribution of 9% of the employees' salary. Individuals that are not employees may also participate in Super at their own discretion.
Typically employers use a financial services company to provide a super fund vehicle to their employees. These funds offer a range of fund choices usually related to investments in share markets, bonds and so on. The employee then chooses one or more of these funds.
Many Australians understand little about Super or only become interested as they approach retirement. It is quite common for employees to lose track of their Super accounts when changing employers.
One option is to establish a Self Managed Super Fund (SMSF) whereby you become the manager of your own Super fund. This approach provides flexibly in what you can invest in. Below is a set of steps to accomplish this.
1. Establish a Self Managed Super Fund (SMSF). Most accountants and lawyers can establish a SMSF. As the Super industry has grown "discount" SMSF service companies have emerged. In general it should cost about $500 to setup a SMSF. A SMSF can have up to four members, for example, family members. The SMSF is a Trust under the law. The members are the Trustees. The Trust has a charter or set of investment objectives. Make sure words similar to the following are included in the investment objectives: “The Trust may invest in collectables and precious metals including gold and silver bars and coins.” A bank account will be opened for the Trust.
2. Consolidate any existing Super funds. Contact the Super fund companies and instruct them to close your accounts and send the proceeds to you SMSF bank account.
3. Make your purchases. You can buy and take delivery of physical precious metals. Of course these items must be stored securely. Banks and other companies offer secure storage. Institutions such as the Perth Mint have "certificate programs" whereby they store precious metals in your name. Keep complete records and receipts of all your transactions for the annual audit.
4. Annual audit. Each year your SMSF must be audited and forms lodged with the Australian Taxation Office (ATO). The company that established your SMSF can do this. Shop around when establishing the fund to get a low annual audit cost. Discount firms charge around $600.
The ATO has an informative website and anyone setting up a SMSF should read the relevant sections on that site (www.ato.gov.au).
Disclaimer: nothing here constitutes financial or legal advice.
