New research by leading SMSF technology company Class revealed the SMSF sector is growing with female balances rising faster than males and majority of new SMSF establishments being driven by millennials.
For the past three years, millennials now aged between 35-44 years, have become the largest cohort of all the age groups establishing SMSFs. New funds established by millennials now account for almost 30% of all new SMSFs established during FY22. Additionally, the average age of people establishing SMSFs has decreased from 51 to 46 years.
The research also found that as well as making more concessional and non-concessional contributions, during FY22 women made 15% more downsizer contributions than in FY21. Additionally, since 2017 female balances have grown faster than males, outperforming them by 4% whilst female balances as a percentage of male balances have increased to 84% from 80%.
Class Chief Executive Officer Mr Tim Steele said the findings demonstrate more Australians are choosing SMSF’s to help them meet their retirement objectives.
“The Class Annual Benchmark Report shows the SMSF sector continues to grow as millennials become more engaged and interested in their financial future. Recent changes in both Superannuation and SMSF legislation have made it easier for people to make additional contributions, whether its from the proceeds of selling a home or through the carry-forward rule of unused concessional contributions. All these options can be a great way to grow balances faster.
“The upward trend in SMSF establishment is good news for Class customers who are seeking out opportunities to grow their businesses. We are committed to continuing to work with our partners and customers to deliver products and solutions to enable them to service these growing customer segments.”
Class General Manager of Growth Jo Hurley said it’s an exciting time for the SMSF sector, and she is looking forward to working with Class customers and partners to further grow the market.
“It’s encouraging to see females and millennials lead the way in new fund establishments and adopting proactive contribution strategies. It’s clear that the profile of SMSF members is changing. New members are younger, more tech savvy, and looking for options that support them in their retirement by giving them more choice and flexibility. We have seen a real increase in the visibility of SMSFs and the benefits they can provide for customers, and this is translating into growth for the industry.
“The report sends a positive message that women are taking action to create more financial freedom for themselves and looking for ways to get ahead. It’s great to see the rise in concessional and non-concessional contributions being made to boost their super balances, Ms Hurley said.
“We know financial services can be daunting. So, if you’re thinking about establishing an SMSF, it’s important to seek out expert professionals that can work with you to find the best solutions to meet your retirement objectives.”
Growth of the SMSF sector continues with SMSF’s now comprising 26% of the $3.4 trillion Superannuation sector.
