SMSF establishment balances see improving advice

The average and medium establishment balances for self-managed super funds (SMSFs) have seen a 38 per cent increase to $521,000, compared to $370,000 in the previous four years.

This is according to the SMSF Association’s Review of the Australian Tax Office’s (ATO) Statistical Overview 2016/17, which saw median asset establishment size rose to $320,000 from the low $200,000 levels in the previous four years.

John Maroney, SMSF Association chief executive, said from their perspective it demonstrated SMSF trustees were receiving quality advice.

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“SMSF trustees and their advisers understand that they need an appropriately sized SMSF to ensure they receive the full benefits of an SMSF,” Maroney said.

“The key to ensuring that SMSFs are established appropriately is high quality and professional financial advice that incorporates size and scale considerations into the decision to establish an SMSF.”

FY 2016/17 was also the last year before the 1 July 2017 superannuation changes took effect, which included the $1.6 million transfer balance cap.

The average establishment number was above the Productivity Commission’s preferred minimum of $500,000, with the median balance expected to reach this threshold in the next few years.

Other highlights from the overview included:

  • SMSFs made an average return of 10.2 per cent compared with the 9.1 per cent return for Australian Prudential Regulation Authority (APRA) regulated funds.
  • SMSF expenses fell eight basis points, largely attributable to increased use of technology and software in fund administration.
  • Of SMSFs established in the 10 years prior to 30 June 2017, 88 per cent were still in existence at that date.
  • The average age brackets of members who are establishing SMSFs was clearly skewed to younger demographics.

 




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