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In relation to the current franking credit dilemma faced by many SMSF members in pension phase, I note that some financial commentators have suggested a possible advantage of investing in an industry super fund if one’s SMSF is likely to lose significant franking credit refunds. I looked at the Balanced option for HOSTPLUS members on their website. For a $50,000 investment, the total fees are quoted as $608. As the fee is based on a percentage of the funds invested, for a $5.0 mil investment, the fee would be $60,800. This seems quite excessive to me, and I wonder whether I am missing something. I definitely would not be closing my SMSF and investing in an industry fund at these fee levels.
Do you have a view on the “advantages” of switching from an SMSF to an industry super fund as a response to the possible loss of franking credit refunds ?
A: I can’t quite see why some commentators would recommend this strategy. Industry super funds wont be in a position to receive cash refunds – so I guess this is more about an option to consider if you don’t want to manage your own SMSF.
I am a bit surprised at the HostPlus fee. I understood that some Industry Funds charged pension members around 0.85%, plus an admin fee of $1.50 per week. Try Australian Super or REST. I can’t say whether there are “scale discounts” for larger sums.
