Comparing super funds fraught with danger: SPAA
The latest Australian Taxation Office (ATO) figures on investment performance and fees for self managed super funds highlight the futility of comparing these funds with other superannuation sectors.
Graeme Colley, Director, Technical and Professional Standards, of the SMSF Professionals’ Association of Australia (SPAA), says the organisation has always argued such comparisons serve no purpose.
“The ATO specifically states that comparing the investment performance between SMSFs and other types of superannuation funds is fraught with danger. While methodologies may be comparable, the data collected from the different types of funds is not the same.
“It’s similar with fees. Comparing the operating expenses of SMSFs compared with other types of superannuation funds is difficult. While the ratios used in the ATO statistics may be comparable, the data collected from the different types of funds is not the same.
”In the 12 months to 30 June 2012, the ATO figures showed the expense ratios of SMSFs are about 0.56%, falling from 0.69% to 0.56% over the five years to 2012.
Collley says: “This decrease reflects the increase in the asset sizes of SMSFs over the period as well as increased competition in the market for audit, accounting and administration services for SMSFs. Average operating expenses have increased over the same period and are estimated to be $5,600.
“Due to the fixed costs of operating a fund, SMSFs with lower balances have higher average expense ratios – 9.5% with SMSFs with a balance of $50,000 to less than 1% for SMSFs with assets of more than $500,000.”
Colley says the rates of return of SMSFs show a direct relationship with the relative size of the SMSF. The larger the SMSF the greater is the return on assets.
