For anyone who has an SMSF it’s always interesting for comparison to take a look at the latest facts and figures published by the regulators. The ATO1 and APRA2 recently released the latest information for June 2021 which gives a good idea of how things are changing. These stats continue to provide an insight into the growth in the size, demographics and investments of SMSFs.
How many SMSFs and members?
It’s estimated that there are just under 600,000 SMSFs of which represent a little over 1.1 million members. Most SMSFs have 2 members3 and there are around 24% with just one member. So the majority of SMSFs, which has been a constant percentage for many years, consist of 2 or less members. The total number of SMSFs with 3 or 4 members is in the vicinity of 7%. With the increase from 1 July 2021 in the maximum number of SMSF members from 4 to 6 it will be interesting to see whether there will be an increase in fund membership or whether new funds will be established to take up the opportunity of the increase.
There were 25,312 SMSFs established in the 2020/21 financial year and just 2,187 were wound up. Since July 2014 the average net increase in SMSFs being established has been 13,241 which continues the strong growth pattern which has been in place for many years.
The ATO tells us that the total membership of SMSFs consists of 53% males and 47% females. The ages of the members are spread over 35 to 84 of which 86% of members are 45 years or older. There is nothing surprising in these statistics as it is reasonable to expect that most members in younger age brackets are likely to have less than a reasonable amount to make the SMSF viable from a financial point of view.
How much do SMSFs have invested?
As the table shows the total assets in superannuation funds as at June 2021 are in the vicinity of $3.3 trillion and SMSFs represent $822 billion or around 25% of all superannuation investments. The surprising thing with SMSFs is that the 1.1 million members are less than 5% of everyone who has a superannuation account.
Assets of superannuation entities4
Over recent years, super balances have grown significantly and for SMSFs the average member balance in an SMSF in June 2021 was about $696,000 with the average fund assets were about $1.3 million. Due to substantial increases in the value of investment markets since June 2021 it could be expected that average member balances and average fund assets have continued to increase.
While averages may be used to give a reasonable idea of the size of SMSFs it is probably the median member and fund balance which provides a better idea of a typical SMSF. The median balances are around 2/3rds of the average SMSF member and fund balance. This means the median member balance was $414,912 in the 2019/20 financial year and the median SMSF balance was $733,926.
Irrespective of which measure you use to determine a typical SMSF, the member balances are far greater than those in other types of funds such as industry, retail or government fund. The main reason for the difference is that it is not considered cost effective to start an SMSF with less than total investments of $200,000 in the general run of cases. Around 14% of SMSFs have balances of less than $200,000, a figure that has been gradually decreasing as funds mature and balances increase due to investment returns and member contributions. At the other end of the scale there are about 9% of SMSF members who have a balance of more than $1.6 million.
Corporate or Individual Trustee?
The latest statistics indicate the majority of SMSFs have a corporate trustee (63%) which does provide some practical benefits over individual trustees. This is due to the investments of the fund being held under the company name which means that if there is a change in the number of fund members there is no need to change the holder of the fund’s investments. However, if the trustees of the fund are individuals, each time the holders of the fund investments change then they will need to be registered in the name of the new individual trustees.
While these stats may seem to be an attractive lure for anyone thinking of starting an SMSF, they are not for everyone. Before diving head long into starting an SMSF there are many things that need to be considered such as whether there is a genuine reason for commencing the fund, understanding fund investments and trustee responsibilities.
Subscribe below SMSF News to receive my latest articlesGraeme Colley, Executive Manager, SMSF Technical and Private Wealth SuperConcepts
While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) (AMP Capital) makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. The information contained in this document are for illustrative purposes only and this document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs.
This document is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital. This document is not intended for distribution or use in any jurisdiction where it would be contrary to applicable laws, regulations or directives and does not constitute a recommendation, offer, solicitation or invitation to invest.