The amount of money presently being spent on self-managed-super-fund (SMSF) advertising and the number of industry funds developing products intended to mimic SMSFs prove the long-term threat to retail funds for Michael Hallinan. The special counsel on superannuation for Townsends Business and Corporate Lawyers thinks the tide has inexorably turned.
‘The future of super seems to be between industry funds and SMSFs with industry funds acting as incubators for SMSFs,” he said.
“Possibly the most significant market development in super over the last 20 years has been the relative decline of retail funds and the emergence of SMSF and industry funds.
“SMSFs are the most significant long-term threat to both retail and industry funds. This is clearly shown by the current advertising focus on SMSFs and by industry funds developing products which are intended to mimic SMSFs.”
Citing Australian Prudential Regulation Authority figures to March 31 that estimate that the total value of superannuation assets is $1.58 trillion, Hallinan (right) says SMSFs are estimated to constitute 31.5 per cent of Australia’s superannuation assets, making SMSFs the largest superannuation sector.
The other sectors, in descending order, are retail funds with 26.3 per cent, industry funds with 19.8 per cent, public sector funds with 15.7 per cent and corporate funds with 3.8 per cent. The missing 0.1 per cent is held by small APRA-administered funds.
For the March 2013 quarter, all superannuation sectors experienced growth in assets. For industry funds, the growth was 5.7 per cent in super assets; SMSF assets grew by 4.7 per cent with the other sectors having 4.3 per cent (public sector and the corporate sector) and 4.2 per cent (retail sector) growth.
In related news, the SMSF Professionals’ Association of Australia (SPAA) says the methodology used to measure superannuation tax concessions is “fatally flawed” and, as a consequence, misinforms the debate around retirement income policy.
“Measuring the concessions as tax expenditure using a comprehensive income benchmark is misleading and biased against concessions because any derivation from income being taxed at a taxpayer’s marginal tax rate is regarded as a cost to government revenue,” said SPAA chief executive Andrea Slattery.
“This ignores superannuation’s primary purpose: providing retirement income and decreasing reliance on the government for retirement income support.”
