Do you fit the latest profile of a ‘typical’ SMSF trustee?

Note: We regularly update this article with the latest data on self-managed superannuation funds (SMSFs) issued by the Australian Taxation Office. This article contains the latest data available as at June 2014 (for data up to March 2014).

The latest ATO statistics on SMSFs (representing SMSF activity up to the end of March 2014) highlight some interesting observations that can be made about the current batch of SMSF trustees.

Although attempting to slot just over 1 million trustees running nearly 530,000 SMSFs into a box called ‘typical’ is an impossible task, the statistics do shed some light on the average SMSF balance, the ages of SMSF trustees, state of origin, gender balance and income levels.

Note: As at March 2014, the ATO estimates there were 1,006,975 SMSF trustees running 528,701 self-managed super funds.

Average is not always typical

According to the ATO, the total amount of wealth owned via SMSFs is nearly $550 billion ($546.92 billion) – just under a third of all money invested via superannuation funds!

The average SMSF balance is approximately $1,035,000, which means that the average fund balance for a SMSF has increased by $28,000 over the past 6 months. Considering the starting balance, this increase seems quite small, but note that it is an average balance, which possibly means new SMSFs with smaller balances may skew the average increase, and markets have been volatile in recent months.

The average account balance for a SMSF member is just over $540,000 ($543,128, as at March 2014). A typical SMSF has 2 fund members, although an ‘average’ SMSF supports 1.9 fund members (that is, dividing the number of SMSF trustees by the number of SMSFs).

The average fund balance however doesn’t necessarily represent a typical SMSF. Here’s a few interesting statistics:

  • Nearly one quarter (23.3%) of all SMSFs have $200,000 or less in assets, with 6.7% of SMSFs (just over 35,000 SMSFs) holding less than $50,000 in assets.
  • Another quarter (25.6%) of all SMSFs have between $200,000 and $500,000 in fund assets
  • Just under a quarter (23.4%) of SMSFs hold between $500,000 and $1 million in assets.
  • The remaining quarter-plus (27.7%) have more than $1 million in fund assets with just under 11% of all SMSFs holding more than $2 million in assets. Interestingly, 1.8% of all SMSFs (around 9,500 SMSFs) have fund balances worth $5 million or more.

The size of a SMSF can also be influenced by the number of fund members – presumably, the more members a SMSF has, the more likely the fund balance will be larger. For the record, more than two-thirds (69.2%) of SMSFs have two members, nearly a quarter (22.7%) are single-member SMSFs and 8% of SMSFs have three or four members.

Another significant trend is that the number of Australians setting up SMSFs is not stalling as predicted by many in the super industry only a few years ago – around 33,000 new SMSFs were established during the 12 months to March 2014 (33,194 to be precise).

SMSF wind-ups: In the 12 months to March 2014, 6160 SMSFs were wound up, compared to 7,890 SMSF wind ups in the previous 12 months to March 2013, and in marked contrast to the 15,063 SMSF wind-ups in the 12 months to June 2010. The spike in wind-ups during 2010 was also linked to compliance activity by the ATO.

Historically, and currently, the high wind-up figures for SMSFs in June of each year are due to individuals realising that running an SMSF is more work than they expected, and so they opt to wind up the fund, although some are linked to the death of the last member of an SMSF. I find the lower wind-up figures (apart from the 2010 spike) heartening because I interpret this trend as an indication that Australians are doing their research and making an educated choice when deciding whether to set up a SMSF, and whether such a hands-on super fund is appropriate.

SMSF trustees are getting younger…

Well over half (58.2%) of SMSF trustees are aged over 55, but the latest statistics reinforce that the dominance by over-55s is slowly changing as younger generations discover the joys (and tribulations) of running their own funds. Just over a quarter (25.4%) of new SMSF trustees (for funds established during the March 2014 quarter) are over the age of 55, which obviously means that nearly three-quarters of new SMSF trustees under the age of 55, and a significant 42.4% are under the age of 45.

Looking at both new and existing DIY super trustees, a massive 82.1% of SMSF trustees (around 827,000) are at least 45 years old, with more than a quarter (25.9%) of SMSF trustees aged 65 or over. When you look at the profile of new SMSF trustees (established during March 2014 quarter) however, only 57.6% of the new trustees are over 45, and nearly a third (29.9%) of the new trustees are aged between 35 and 44 years, with another third (32.2%) of new trustees aged between 45 and 54 years.

Where SMSF trustees live…

Typically, if you’re over 55 and live in New South Wales or Victoria, then you’re more likely than any other Australians to run a SMSF, according to ATO statistics. Nearly two-thirds of all SMSFs (62.4%) are based in Victoria and New South Wales, and more than half (58.2%) of all SMSF members are aged 55 or over. If you’re under the age of 25 and live in Tasmania or Northern Territory, then you’re the least likely to run a SMSF with a mere 1.1% of SMSF members falling into the under-25 category and only 1.4% (7,401) of SMSFs being based in Tasmania, and 0.2% (1,057) in Northern Territory, according to the ATO.

Queenslanders, however, control a healthy 16.6% (87,764) of all SMSFs, and Western Australians run just over 10% (around 54,985) of the 528,701 SMSFs in Australia as at March 2014. South Australia isn’t far behind, with 7.2% of all SMSFs (38,066) being based in South Australia.

Earn less than $80,000…

Two-thirds (66.5%) of SMSF trustees have a taxable income of less than $80,000 a year although this statistic is likely to be distorted by the fact that SMSF trustees receiving payments from SMSF pensions are not required to include this pension income in personal tax returns.

More than half (55%) of SMSF trustees earn less than $60,000 a year, while just under half (42.2%) of all SMSF trustees have a taxable income of $40,000 or less. Nearly a quarter (23.1%) of all SMSF trustees earn less than $20,000, while a similar percentage (22.1%) of SMSF trustees earn $100,000 or more.

Note: The figures quoted in the above paragraphs don’t add up to 100% because the ATO does not have taxable income figures for 3.8% of SMSF members.

And for those curious about the gender balance within SMSFs, females are outnumbered by males, but only just —52.9 per cent of SMSF trustees are men, and 47.1 per cent are women, generally reflecting that many couples start a SMSF together. The gender breakdown for new SMSFs established in the past 3 months is the same as the overall gender balance.

© Copyright Trish Power 2009-2014

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.

IMPORTANT: SuperGuide does not provide financial advice. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Readers need to seek independent advice about their personal circumstances.

Comments

  1. Hi Trish

    My wife and I have a SMSF. I am in pension phase and my wife, not working ( age 55 ) continues in accumulation phase and does not need to access her funds as my pension is more than satisfactory.

    I also have 10 years SMSF pension income in cash and the remainder in equities.

    She wants to contribute $450k into her super as an undeducted contribution.

    These (her) funds are currently invested in a T/D paying 4% pa almost tax free as she earns under the $18,000 tax threshold.

    Once the $450k is deposited into the SMSF the fund would be up for $2700 in tax ( SMSF at 15%).

    My questions are;
    1. If she wants to can she access the entire $450k undeducted contribution from the SMSF as a lump sum when she changes from accumulation phase to pension phase ??? and

    2. Is she better to leave the funds in the T/D in her name taxfree and only contribute these funds just prior to her moving to pension phase ??

    PS..my wife has always been sceptical of super, ( a healthy mistrust of constant government changes/tinkering with super and therefore access to her hard earned money) hence the amounts held outside the SMSF.

    Thanks

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