Technical Update – Role of APRA Funds

Small APRA funds or SAFs are “do it yourself” funds similar to Self Managed Superannuation Funds, SMSFs.  The major difference between the two superannuation vehicles is that members of the SMSF have to be trustees of the SMSF, either in their own name or through the directorship of a corporate trustee; on the other end for SAFs, the trustee duties are delegated to a professional trustee company.  SAFs are regulated by APRA not by the ATO.   Basically SAF provide clients with the features of the SMSF but without the cumbersome duties of associated with trusteeship.  Therefore they can be a more appropriate vehicle than the SMSF in the following instances:

  • Elderly clients who may struggle with their duties as SMSF trustees either because of age or onset of dementia.
  • Clients with large account balances who are time poor or reluctant to take on trustee duties associated with a SMSF
  • Providing for Mentally disabled children through an income stream – this would not be possible within a SMSF as the mentally disabled children could not be trustees because of their impairment.
  • Protection of family members of blended families – ensuring that on the death of a beneficiary, the remaining member/trustee does not take control of the fund at the expense of other potential beneficiaries.
  • Non residents and expatriates – where there is a risk for a SMSF to be become non compliant
  • Bankrupts or other disqualified individuals

However the ongoing fees of SAFs are higher than SMSFs as they have to incur professional trustee fees and therefore SAFs are only suitable for larger account balances.