ASIC warns self-managed super fund trend may leave many retirees worse off

ASIC Commissioner Alan Kirkland warned that the higher costs, complexity and risk associated with setting up an SMSF – which are not regulated by the Australian Prudential Regulation Authority (APRA) – meant that they were not suitable for everyone.

“SMSF trustees should be aware of the associated costs, responsibilities and risks,” Commissioner Kirkland said. These included the need for trustees of SMSFs to have the “time and skill” required to manage the fund, higher administrative requirements and costs, and risks associated with less diversified assets, such as direct property investments, ASIC warned^.

“People who move their super from an APRA-regulated fund to an SMSF also lose important protections, including the benefits of prudential regulation and the ability to make a complaint about the fund or its trustees to [the Australian Financial Complaints Authority],” Commissioner Kirkland said.

He said while a number of Australians had been attracted by the prospect of having greater control over their super, proper consideration needed to be given to whether an SMSF was suitable for a person’s objectives, financial situation and needs.

The SMSF sector has been growing, with 41,980 new funds established in the year to June 2025, up from 33,032 the previous year.

ASIC warned that recent collapses elsewhere that saw many Australians lose their retirement savings were an example of what could go wrong.

“Collapses like those involving Shield and First Guardian show us the worst-case scenario for what happens when people receive poor advice to switch superannuation funds and make high-risk investments,” Mr Kirkland said.

High-pressure sales tactics aimed at “tricking” people into switching their super quickly should be disrupted to help strengthen protections for consumers, ASIC Chair Joe Longo said when commenting on the issue in an address to the National Press Club earlier this month^#.

An SMSF provides the flexibility for people to make their own investment decisions, but they also require you to manage the fund yourself and are much more complex than other types of super funds.

One of the main reasons people want to open an SMSF is to purchase a property through their fund.

However, this can result in increased investment risk, because most of the fund’s assets may be tied up in just one asset, and property is not easily sold or converted to cash if needed.

SMSF trustees must ensure the fund will have sufficient cash flow and liquidity to pay any expenses and, in the case of a property investment, that the property’s expected rental yield and capital growth will line up with your retirement objectives.

Considering setting up an SMSF or making other changes to your super? Contact our guidance team. Make a time to talk