ATO statistics show SMSF sector a picture of health | December 2016

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ATO statistics show SMSF sector a picture of health

21 December 2016 | SMSF Association Media Release

The latest Australian Tax Office (ATO) annual SMSF statistics paint a glowing picture, with the sector growing steadily in terms of the number of new members and funds, funds under management, and investment returns and expenses competitive with the APRA-regulated sector.

SMSF Association Managing Director/CEO Andrea Slattery says: “The ATO statistical overview for 2014-15 reveals a very positive set of numbers. All the indicators show solid growth, with the average assets of SMSFs reaching $1.1 million – a growth of 20% over five years.

“There were 577,000 funds (99.5% of the number of super funds), with growth over the past five years of nearly 6% – a sustainable increase. In terms of trustees/members, there are now nearly 1.1 million, split 53:47 per cent between males and females

Slattery says what was encouraging for the Association were two trends related to women and start-ups, with younger people increasingly setting up SMSFs, and the strong growth in female balances over the past five years.

“The fact women’s average balances have risen 24% to $498,000 over the past five years (it was up to 17% to $633,000 for men) is a very exciting development. It’s further evidence that women are becoming far more involved in their SMSFs, either individually or by getting specialist SMSF advice.

“It’s also a cue to SMSF specialists that there is a growing market of female trustees and members who are looking for advice as they become far more hands-on. New advice requirements for women have been a focus for the Association by providing new advice designs and having proficient specialist members in this area.”

She says the fact the median age of SMSF members of newly established funds has fallen to 48 years compared with 59 years for all SMSF members at 30 June 2015 is a welcomed demographic shift.

“It shows younger people are being actively involved in their retirement income strategies, and this can only enhance their ability to achieve a dignified and secure retirement.”

SMSF investment returns in 2014-15 were 6.2% – consistent with the returns of the APRA-regulated sector.

“SMSF trustees continue to demonstrate they are able to generate healthy returns, despite the market volatility post the GFC. Although there are still sceptics who remain highly critical of SMSF asset allocation, the evidence is that it has served them well.”

For the first time, the ATO dissected SMSF expenses into “investment” and “administration” – an initiative the Association has long advocated and assisted the ATO in achieving.

It shows the estimated total expense ratio for SMSFs as funds (not per member) in 2014-15 was 1.1% and when split between investment and administration, they were 0.6% and 0.5%, respectively. For the member, this ratio would be lower again.

“The Association welcomes the ATO’s decision to report expenses this way. Not only does it give a more accurate picture, but it helps demonstrate that in terms of cost SMSFs are competitive with their APRA counterparts.

On the asset allocation front, Australian-listed shares, cash and term deposits remain the bulk of the investments at 57%, and 81% off all investments are done directly.

Slattery says it’s interesting to note that cash and fixed deposits declined slightly, with an increase in trusts and other managed investments.