SMSFs hold lead in super assets as younger members go it alone

Total assets in self-managed superannuation funds (SMSF) rose to a record as an increasing number of investors from younger age groups opted to take control of their retirement savings.

SMSFs held nearly $439 billion of assets as at 30 June 2012, up from $423 billion at the end of financial year 2010/11, the Australian Taxation Office’s (ATO) latest Self-managed super funds: A statistical overview 2010-11 report showed. The average SMSF member balance was over $506,000.

‘The SMSF sector remained the largest sector of the Australian super industry, comprising 99% of the number of funds and 31% of the $1.4 trillion total super assets as at 30 June 2012,’ the report said.

Between the years ended 30 June 2008 to 30 June 2012, SMSF numbers grew from almost 376,000 to over 478,000. This represents growth of over 27%.

‘The growth in SMSFs … reflects the improvement in community confidence in the economy and the adaptability of the SMSF sector,’ the report said.

Younger demographics

The trend continued for members of new SMSFs to be from younger age groups than those of the total SMSF member population, the report confirmed.

Of SMSFs established in 2008, just over 50% of members were under 55 years old. This compares with almost 62% of members of SMSFs established in 2011. The average and median age of members over the four years had also declined from approximately 54 to 51 years.

Figure 1 tables the approximate age of SMSF members as at 30 June 2012, along with the age distribution of members of SMSFs established in each year from 2008 to 2011.

Figure 1: SMSF member age ranges

Members by age

All SMSF members to June 2012

SMSFs established in:

2008

2009

2010

2011

<25

1.0%

1.1%

1.1%

1.3%

1.5%

25-34

3.4%

5.2%

6.3%

7.3%

8.1%

35-44

11.2%

18.5%

20.6%

22.5%

22.8%

45-54

22.8%

25.4%

27.4%

29.1%

29.5%

55-64

33.4%

29.8%

30.3%

28.6%

28.4%

>64

28.1%

20.0%

14.4%

11.2%

9.8%

Total

100%

100%

100%

100%

100%

Average member age

51.7

54.0

52.4

51.1

50.6

Median member age

52.3

54.9

53.3

51.7

51.2

Source: Australian Taxation Office (2012)

Investment performance, asset allocation

For the year to June 2011, SMSFs produced an estimated return on assets of 7.7%, which was equivalent to the return for the previous period ended 30 June 2010. This follows negative returns of 6% and 6.8% in 2008/09 and 2009/10, respectively.

SMSFs directly invested 78% of their assets. Most of the total capital was invested in cash, term deposits and Australian-listed shares. While smaller SMSFs tended to favour cash and term deposits, larger SMSFs had a greater tendency to invest in listed shares.

The majority of SMSFs are solely in the accumulation phase (64%); however, there is a clear shift for more recently established SMSFs to start pension payments earlier, the report said.

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