Industry fears that young people are rushing to set up self-managed super funds (SMSFs) are not supported by the latest statistics on this superannuation sector from the Australian Taxation Office.
SMSF Professionals’ Association of Australia’s (SPAA) Director of Technical and Professional Standards, Graeme Colley, says the figures show the sector is growing strongly, but the preponderance of trustees and members are still found in SMSFs with funds under management of between $200,000 and $2 million.
“The ‘Self-managed super fund statistical report – September 2014’ shows that in 2009-10, 63.9% of trustees and members had FUM within this range, and in 2012-13 this figure had risen slightly to 65.7%.
“By contrast, in SMSFs with FUM under $150,000, there has been a slight decline over this four-period from 20.5% to 17.2%.
“SPAA strongly believes younger people who want to take direct control of their retirement savings should still be encouraged to do so and remains resolutely opposed to any artificial barriers to entry to an SMSF.
“But the notion in some industry circles that young, naïve people are being ‘enticed’ into SMSFs in increasing numbers is simply not borne out by the figures.”
Colley says the figures also help put to bed another furphy – that SMSFs with low balances have an “unhealthy” concentration of their assets in residential property.
In 2010, the percentage of residential property assets in funds with less than $50,000 was a miniscule 0.33%, and by 2013 this figure had only risen to 0.7%.
“Once again it is the funds with assets between $200,000 and $2 million that have the biggest attraction to residential property with average weightings of 4.2% of all assets in 2010, a figure that has only risen to 4.3% by 2013.
“The notion that SMSFs are piling into residential property with their ears pinned back is simply not supported by the ATO figures.
“The statistics relating to limited recourse borrowing arrangements (LRBAs) also are reassuring – and should be heeded by the Financial System Inquiry which has raised this issue.
“In the three months from March 2013 to June 2013, LRBAs nearly trebled (largely due to a reconfiguring by the ATO on how it measures LRBA assets) from $2.6 billion to $8.7 billion, but for the past 15 months to 30 September 2014, the latter figure has only moved to $9.2 billion for the June-September 2014 quarter – hardly an implosion of LRBAs.”
Colley says the SMSF sector continued to grow in the 12 months to 30 September 2014 with 20,173 new funds being established, and, at the same time, the number of funds wound up remained constant compared with previous years.
“This growing number of funds, especially by the older age groups, shows that people are increasingly favouring SMSFs as they near retirement and when they enter retirement and begin drawing down their savings, probably as pensions,” he says.
