SMSFs represent 25% of total super assets

18/08/2008

Latest figures indicate that about 25% of total super assets are held in SMSFs.  Approximately $300b is held in SMSFs while the total Australian super assets are about $1.2 trillion.
 
Also that average fund (not member) balance in SMSFs is approximately $800,000 with most SMSFs still in accumulation phase.
 
Corporate super funds (ie stand alone employer sponsored funds) are declining in numbers and as a percentage of total super assets.  The fastest growing types of funds are SMSFs and industry funds.
 
While retail and master funds (ie bank, life company or investment manager sponsored funds) are the largest type in asset value they are not growing as fast as industry funds or SMSFs.
 
The decline in the significance of corporate funds is readily explained by the decision of many employers to simply not be involved in the administration of super funds – they would prefer to pay the appropriate contribution to the employee’s preferred super fund and not have any further involvement.  For many employers super is now a payroll matter; so long as the employer pays the correct superannuation contribution and obtains a tax deduction for the contribution the employer has no further interest.
 
The relative decline in retail funds can also be explained by the very effective competition offered by industry funds – low fees and simple product design.
 
The growth in SMSFs has confounded many industry commentators.  When the Superannuation Industry (Supervision) Act was introduced in 1994 many thought that excluded superannuation funds (the then name for SMSFs) would appeal to only a very small proportion of super members.  To the contrary, the growth both in numbers of SMSFs and their aggregate asset value has been spectacular.
 
While the attraction of SMSFs for some super members can be explained by some regulatory advantages of SMSFs (the main one is the business real property exception), for most super members the attraction of SMSFs is control.  Super members who operate their own SMSF generally want and can have a far greater control over their superannuation: control as to investment policy, control as to the types of benefits received and control over the tax aspects of their fund – such as choosing when to realise capital gains.