SMSF sector strong despite critics
Claims that self-managed superannuation fund (SMSF) members are looking to return to mainstream funds are unfounded, according to SuperGuardian, Xpress Super chief executive, Olivia Long.
Long rejected comments made by Care Super chief executive, Julie Lander, who said some SMSF members were becoming disillusioned with their funds and "we increasingly finding it a costly and time-consuming experience they misunderstood before setting up".
"Worse still, closing an SMSF can be a very labour intensive and technical process," Lander said.
However, Long said that figures from the Australian Taxation Office (ATO), which showed 34,800 SMSFs were set-up annually in the five years to 30 June 2013, with 7800 were wound up each year, suggested there was still a strong appetite for self-managed funds.
"This hardly presents a picture of disillusionment," she said.
"The reality is there is no hard and fast data on why SMSFs are being wound up.
"What we do know, conclusively, is that far more are being established than are being closed down, and the vast majority of these new SMSF members are coming from the ranks of the APRA-regulated funds."
Long said industry and retail funds tried to suggest that the SMSF sector was in decline by highlighting the number of wind-ups, despite data indicating growth in the sector.
"It is often implicit in their statements that trustees are quitting their SMSFs because of complexity, time, or because they have been closed down by the ATO," she said.
"No doubt these are causes of some SMSFs being wound up. But I can add three other valid reasons that often apply:
- Death or ageing of a trustee. With more than 55 per cent of SMSF members over age 55, this is likely to be the cause of a larger number of natural wind ups;
- The taxation benefits of the SMSF are no longer relevant for retirees so they draw out the money and invest personally;
- People move overseas — at which point they roll over to an APRA-regulated fund as the easiest option."
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
