The Australian Taxation Office (ATO) Statistical Overview on the self managed super fund sector for the 12 months to 30 June 2011 draws a picture of continued solid growth, sound investment performance and falling costs.
SMSF Professionals’ Association of Australia (SPAA) education and professional standards director Graeme Colley says the ATO Overview is a positive endorsement for SMSFs at a time when regulators and government have expressed concerns about the sector.
The ATO figures give a complete insight into SMSFs, including member demographics, contributions, investment performance, asset allocation, operating expenses and compliance.
Mr Colley says: “The most recent figures for 2011-12 show that the number of net new funds established were 35,276 compared with 28,031 for the previous year to 30 June 2011. Although the 2011-12 figure is the highest recorded number since these reports began in 2008, the more important factor is that the percentage increase in the number of net establishments compared with previous years appears to be slowing (26% increase for 2012 compared to a 84% increase in 2011).
“At the same time, in 2012 there was a sharp decline in the number of fund wind-ups, with only 994 wind-ups compared with 5108 in 2011 and 14,699 in 2010.
“These factors, together with increases in average SMSF balances, suggest reports that SMSFs are being oversold to unsuitable clients are being overstated.”
Other highlights from the ATO statistics are:
- The number of younger individuals setting up SMSFs continues to grow with a significant increase in the number of members between the ages of 25 and 54 (particularly between the ages of 35- 44).
- Member contributions have remained relatively stable over the past four years, although there is a decrease in employer contributions that appears to be in line with the reduction in the concessional contribution cap.
- The investment performance of SMSFs remains on par with APRA funds (SMSF = 7.7% versus 7.8% for APRA funds). The slight underperformance probably due to the SMSF sector having a greater exposure to cash and fixed interest compared with APRA funds and therefore may have missed out on some of the upswing in the share market over the past 12 months.
- The estimated operating expense ratio of SMSFs fell over the four years to 30 June 2011 (from 0.69% for the year ended 30 June 2008 to 0.54% for the year ended 30 June 2011). As at 30 June 2011, over 40% of SMSFs had an operating expense ratio of less than 0.25% (compared to 37% of funds as at 30 June 2010 and 30% of funds as at 30 June 2008).
Mr Colley concludes: “The ATO numbers show that the sector continues to perform and grow strongly in line with market expectations. While SMSFs are not suitable for everyone, there is growing evidence that suggests there is increased understanding of how they are to be used correctly.
“All the evidence suggests the right people are setting up SMSFs and, with the assistance of the appropriate professional specialists, are prudently managing their fund in a responsible way.”