On this page
Self-managed super funds (SMSFs) are now firmly embedded in Australia’s superannuation system, so what type of people are attracted to running their own funds?
SMSFs are privately run super funds that can have between one and six members.
At last count, 1.12 million Australians were members. Perhaps you’re one of them or thinking of joining the crowd; but have you ever wondered what type of people choose to run their own fund?
According to the latest Australian Taxation Office (ATO) statistics, the number of SMSF members and funds continues to grow steadily, although the rate of growth has been uneven in recent years as the sector matures and market volatility impacts decision-making.
Collectively, SMSFs hold 26% of the $3.4 trillion in super assets.
Increasingly, those SMSF members are female, especially in younger age groups. At last count, 47% of SMSF members were female with an average balance of $745,000. While lower than the average balance of $882,000 for men, women are gradually closing the gap.
Almost 70% of SMSFs have two members, typically an older married couple; 24% have one member while only 3% have three members and 4% have four. And these percentages have been consistent for many years. Legislation was passed in June 2021 that increased the maximum number of members allowed in an SMSF from four to six. This came into effect from 1 July 2021, but the current make-up of funds would indicate there may not be much demand.
Age and gender distribution
The age ranges and genders of SMSF members at the end of June 2022 were fairly evenly spread between the ages of 35 and 84, as indicated in the table below.
The median age for all SMSF members was 61.6, which has crept up a little as the Baby Boomers move into retirement.
The gender of members is also fairly evenly split, at 53% male and 47% female.
Age profile of SMSF members: All members
Age range | All members |
---|---|
<25 | 0.5% |
25 to 34 | 2.6% |
35 to 44 | 10.4% |
45 to 49 | 8.8% |
50 to 54 | 11.4% |
55 to 59 | 12.0% |
60 to 64 | 12.9% |
65 to 69 | 12.3% |
70 to 74 | 11.9% |
75 to 84 | 14.2% |
85+ | 3.0% |
Total | 100% |
Average member age | 61.0 |
Median member age | 61.6 |
Source: Australian Taxation Office
The ATO statistics also reveal that both men and women aged between 35 and 54 have been the most active in terms of recently establishing new SMSFs.
Age profile of new SMSF members
Age range | 2020–21 | 2019–20 | 2018–19 | 2017–18 | 2016–17 |
---|---|---|---|---|---|
<25 | 1.2% | 1.5% | 1.5% | 1.6% | 1.7% |
25 to 34 | 9.9% | 12.1% | 12.3% | 12.9% | 10.7% |
35 to 44 | 33.9% | 32.6% | 31.9% | 31.8% | 28.6% |
45 to 49 | 18.5% | 17.6% | 18.0% | 17.7% | 17.3% |
50 to 54 | 15.6% | 14.7% | 14.4% | 14.3% | 15.1% |
55 to 59 | 11.3% | 11.3% | 11.6% | 11.2% | 12.7% |
60 to 64 | 5.9% | 6.0% | 6.1% | 6.2% | 7.9% |
65 to 69 | 2.5% | 2.6% | 2.6% | 2.9% | 3.8% |
70 to 74 | 0.9% | 1.1% | 1.2% | 1.2% | 1.7% |
75 to 84 | 0.4% | 0.4% | 0.4% | 0.3% | 0.5% |
85+ | 0.0% | 0.0% | 0.0% | 0.0% | <0.1% |
Total | 100% | 100% | 100% | 100% | 100% |
Average member age | 46.7 | 46.4 | 46.5 | 46.4 | 47.8 |
Median member age | 46.3 | 46.1 | 46.2 | 46.1 | 47.5 |
Source: Australian Taxation Office
Member income and balance by age
The following table provides information on the income ranges of people who were SMSF members at the end of June 2021, based on the member’s most recently lodged personal tax return.
Age range | Average taxable income | Median taxable income | Average member balance per 2021 SAR | Median member balance per 2021 SAR |
---|---|---|---|---|
<25 | $61,752 | $44,799 | $66,226 | $8,302 |
25 to 34 | $112,570 | $82,594 | $105,223 | $49,738 |
35 to 44 | $151,772 | $101,380 | $194,566 | $125,445 |
45 to 49 | $167,787 | $105,985 | $296,436 | $189,242 |
50 to 54 | $165,223 | $100,154 | $418,189 | $250,156 |
55 to 59 | $150,345 | $88,889 | $627,581 | $359,471 |
60 to 64 | $125,348 | $64,309 | $911,977 | $551,186 |
65 to 69 | $97,727 | $40,990 | $1,100,952 | $687,807 |
70 to 74 | $83,201 | $30,576 | $1,203,263 | $692,684 |
75 to 84 | $83,934 | $28,061 | $1,253,412 | $686,883 |
85+ | $101,194 | $34,164 | $1,099,988 | $566,488 |
Unknown | $- | $- | $952,214 | $328,153 |
Total (all ages) | $126,966 | $68,706 | $773,726 | $366,584 |
Source: Australian Taxation Office
Despite the perception that SMSFs are only for wealthy individuals, more than half of all members earned below $70,000.
Superannuation balances
The average account balance of all individual SMSF members according to the latest ATO statistics is $791,000, although this figure is skewed by members with very large balances. The median balance (half of all members have a balance higher and half have a balance lower) is a more modest $473,000. These figures are up 26% and 31% respectively over five years.
The increase in SMSF balances is reflected in a marked fall in the percentage of funds with a balance below $500,000, as you can see in the table below. Conversely, over the past five years there has been an increase in funds with a balance between $500,000 and $20 million.
Fund asset range | 2020–21 | 2019–20 | 2018–19 | 2017–18 | 2016–17 |
---|---|---|---|---|---|
$0 to $50k | 5.4% | 5.8% | 6.0% | 6.0% | 6.1% |
>$50k to $100k | 2.3% | 3.0% | 3.2% | 3.5% | 3.8% |
>$100k to $200k | 5.6% | 7.0% | 7.2% | 7.9% | 8.5% |
>$200k to $500k | 19.6% | 22.4% | 22.2% | 23.0% | 23.5% |
>$500k to $1m | 25.2% | 25.3% | 24.7% | 24.5% | 24.2% |
>$1m to $2m | 21.9% | 19.9% | 19.9% | 19.4% | 18.9% |
>$2m to $5m | 15.5% | 12.9% | 13.1% | 12.4% | 11.8% |
>$5m to $10m | 3.5% | 2.8% | 2.8% | 2.6% | 2.5% |
>$10m to $20m | 0.9% | 0.7% | 0.7% | 0.7% | 0.6% |
>$20m to $50m | 0.2% | 0.2% | 0.1% | 0.1% | 0.1% |
>$50m | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% |
Total | 100% | 100% | 100% | 100% | 100% |
Source: Australian Taxation Office
Although it’s generally advised that the cost of setting up and running an SMSF may not be in the best interests of members with a balance of less than $200,000, there is anecdotal evidence that some people establish funds with less in the expectation of increasing their balance fairly quickly.
In any event, the message does seem to be getting through. The proportion of SMSF funds with balances of $200,000 or less fell from 18.4% to 13.3% in the five years to 2020–21.
The differences between SMSF members in the accumulation and retirement phases
ATO statistics show that at the end of June 2021, 35.4% of SMSFs were fully in the retirement phase, while 55.2% were in accumulation phase. The remaining 9.4% had a mixture of accumulation and retirement phase assets.
Following the rule change in July 2017 limiting the amount that can be transferred into a pension account, funds with wealthier pension members with more than the transfer balance cap (currently $1.9 million) will typically be in mixed phase.
Mixed SMSFs include funds where all members are in retirement phase but some fund assets are held outside of pensions, as well as funds with a mix of accumulation members and pension members. Mixed funds may only have one member if that member has both accumulation and pension balances.
Different types of SMSF members
The most common trait for those deciding to start or join an SMSF is having the motivation to choose and manage their own super investments. In 2017, CBA and the SMSF Association produced a report that broke down SMSF members into the following four investor profiles:
- The Controller: This is the most common type of SMSF member. They want to have a high degree of control over the management of their fund and investment decision-making. They may seek professional advice, but they are also confident in their own ability to manage their SMSF, especially in relation to investment decisions.
- The Self-directed Investor: This type is less likely to seek professional advice in managing their fund or making investment decisions than a controller. They have a high level of confidence in their own abilities.
- The Coach Seeker: Coach seekers take a moderately active role in managing their SMSF and making investment decisions. They seek professional guidance to help them, but don’t outsource completely.
- The Outsourcer: This type of SMSF member prefers to almost totally outsource day-to-day administration of their fund and investment decision-making to professionals that they hire.
The bottom line
The number of SMSFs in Australia has continued to rise in recent years, along with average individual member and overall fund balances. Another trend is the growing number of women with SMSFs and a tightening of the gap between male and female account balances.
SMSF members are generally attracted by the freedom to choose and manage their own super investments. But there can be significant costs and responsibilities involved with setting up and running an SMSF, so it’s important that the benefits outweigh the costs.
Leave a comment
You must be a SuperGuide member and logged in to add a comment or question.