The Productivity Commission’s (PC’s) draft report into super is a “timely reminder” to self-managed super fund (SMSF) trustees to pay close attention to the fees and costs their funds incur, in order to ensure their funds are optimising their retirement savings, the SMSF Association said.
SMSF Association CEO John Maroney said the report has a clear message for SMSFs about the negative impact of fees and costs on their retirement incomes, and as such “it’s a critical issue demanding the close attention of trustees and their advisers”.
“With the commission finding that lower balance SMSFs have higher costs than their counterparts, it is important that trustees understand and manage their SMSF in the most cost-effective manner while maintaining the quality of the administration and advice they seek,” Maroney said.
“In particular, for SMSF trustees starting off with a lower balance, it is essential that they have a plan to achieve greater scale and cost-effectiveness as quickly as possible.
“To achieve this goal the association strongly recommends that trustees receive specialised SMSF advice from accredited and appropriately qualified professionals to ensure that their fund is fit for purpose and achieves the best outcomes over the long term.”
Maroney said it was pleasing that that the commission found that engagement was highest with those who had an SMSF, highlighting the role SMSFs play in encouraging choice and competition in the superannuation system.
He also welcomed the key findings and recommendations of the report that largely focused on improving the efficiency and performance of the default superannuation system for the millions of Australians who were members of large superannuation funds.
“Proposed reforms such as employees being allocated a default super fund only once, a ‘best in show’ shortlist of large default super funds, preserving choice and competition and significant insurance reforms are worthy ideas that should be considered to improve the competitiveness and efficiency of the superannuation system.”