Supplying a complete administration service for self managed superannuation funds is where the major opportunities lie for planners in superannuation according to Tower Trust Queensland state manager Gordon Thirlwall.
“This market has about 400-500 new funds per week being established with current member balances around $180,000 compared to the average superannuation balance of $21,000,” Thirlwall says.
Since 1995 small super funds have grown in number from 95,000 to 191,000 while its closest rival, corporate funds dropped from nearly 6,000 to just over 3,000.
“This market is taking off and being driven by accountants through tax planning, financial advisers through the concept of managing funds and the media,” Thirlwall says.
Some of the main reasons people are using self managed super are, according to Thirlwall, that it allows greater control, access to direct investments and more affective tax planning.
“This is one of the key drivers as assets in an investors own name can be put into their own super fund to reduce tax on returns from those assets,” Thirlwall says.
“Complying pensions can also be included in this category which means assets are not lost to the fund on death of the pension holder but retained as part of the normal member balance.”
Since many small super funds are family concerns this also provides estate planning benefits. Thirlwall says unused amounts in the pension remain in a tax effective environment while avoiding lengthy estate administration issues.
However Thirlwall says the most important thing to remember when dealing with small super funds is to ensure that trustees are aware to maintain the fund solely for the purpose of providing retirement benefits for members.
“This is the sleeper issue in the whole small super fund market. It is the trustees job to ensure this is happening and offers planners a real angle to break into this market since it is only a matter of time before the ATO heads out on the audit trail again.”
