SMSF wrap-ups a sign of mature sector

The advent of specialised services assisting self-managed superannuation fund (SMSF) trustees to close down their fund and move into other investment vehicles was a sign of the maturing of the SMSF sector and not an adverse trend away from SMSFs.

SMSF Professionals' Association of Australia (SPAA) Director Technical and Professional Standards Graeme Colley said the SMSF sector had matured and funds were being shut as members died or the funds run out of money to pay to fund members.

"In my previous role with SuperConcepts many clients had held SMSFs with them for over 20 or 30 years since they were in their late 40s and early 50s and they were well into retirement.  The main reasons for many SMSFs being wound up is due to the death of the members," Colley said.

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"Other reasons can be that the money providing benefits in the fund has now run out and there is no purpose to operate the SMSF or the balance in the SMSF has reduced to a level at which it is uneconomic to run the SMSF."

Colley said while there was an increase in the level of SMSFs being wound up 2010 - after the global financial crisis - due to a sizable drop in their fund value many SMSF members "transferred to public funds where they had a similar experience".

In August industry fund CareSuper announced it would work with accounting firm Crowe Horwath to assist SMSF trustees to wind up a fund and roll their super savings into CareSuper, which stated could offer similar investments as an SMSF via several asset class options, listed investment companies, exchange traded funds and term deposits.

The industry fund also stated the deal was the first commercial agreement of its kind, with no other groups having since announced similar arrangements.

At that time Xpress Super chief executive Olivia Long also rejected claims that a growing number of SMSFs were being closed and the majority of new SMSF members were instead shifting across from APRA-regulated funds.




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