- SMSFs are still the leader of the pack
- Who runs the SMSF show, really?
- How old, and how wealthy, are SMSF trustees?
- How much money is invested via the average SMSF?
- What do DIY super fund trustees invest in?
- How well do SMSFs perform?
- How much do SMSFs cost?
- How much do SMSF members contribute?
- How much do SMSF members receive in benefit payments?
Note: The ATO publishes an annual report about SMSFs for each financial year. This article covers the ATO’s 2014-2015 statistical review of SMSFs (released in December 2016). This report also contains data for the 2015-2016 year. The annual report for the 2016-2017 year will be available in December 2017.
The Australian Taxation Office has delivered on its promise to regularly share its market intelligence about self-managed super funds (SMSFs). The ATO has now provided the answers to some of superannuation’s burning questions, such as, ‘Are SMSFs really cheaper than larger super funds?’ and ‘Do SMSFs perform better?’
In December 2016, the ATO released its seventh report into self-managed super funds, publishing key data about SMSF costs, investment performance, SMSF asset allocation, SMSF demographics, types of trustees, and what SMSFs are doing in pension phase.
The latest report gives us an insight, albeit a slightly static and historical insight, into the wealth and behaviour of SMSF trustees. For some SMSF trustees, the ATO findings will simply confirm what you already know about SMSFs based on your own SMSF experience. For many SMSF trustees and service providers however, the ATO report highlights trends in how SMSF trustees invest, how much SMSFs cost to run, and how much money is flowing into SMSFs.
Background: This trend towards ATO transparency began in 2009, when the ATO produced a SMSF statistical summary for the Cooper Review. The 2009 report contained information from both publicly available and previously unpublished ATO data. Two years later, the ATO updated this earlier statistical summary by producing the report, ‘Self-managed super funds: A statistical overview 2008-2009’. And again, in April 2012, the ATO released a SMSF report, ‘Self-managed superannuation funds: A statistical overview 2009-10’. The third report was released in late December 2012 covering the 2010/2011 year, the fourth report (released in December 2013) covered the 2011/2012 financial year, the fifth report (released in December 2014) covering the 2012/2013 year, and the sixth report was released in December 2015 covering the 2013/2014 financial year.
The seventh report, and the latest report, was released in December 2016 and covers the 2014/2015 year, although the report also includes significant data about the 2015/2016 year.
This article is a snapshot of the ATO’s latest statistical summary. Continue reading for the inside story on SMSFs including:
- SMSF growth: average account balance and total assets
- Individual versus corporate trustees
- SMSF service providers
- Age and income of SMSF trustees
- Asset size of SMSFs
- SMSF investment performance and asset allocation
- SMSF costs
- Super contributions made to SMSFs
- SMSF benefit payments
SMSFs are still the leader of the pack
SMSFs are the fastest growing sector of the Australian super industry for the 5 years to 30 June 2016, closely followed by industry funds. During this 5-year period, SMSF assets grew by 55% (or $220 billion), while total super assets (including large funds) grew by 59% (or $780 billion). SMSFs contributed 28.2% in the proportion of overall growth, while industry funds contributed 27.6% ($216 billion), and retail super funds contributed 22.7% (or $177 billion).
The number of SMSFs also grew substantially (31%) during the 5 years to 30 June 2016, growing from 473,408 as at 30 June 2012 to 577,236 as at 30 June 2016. Historically, the number of SMSFs rose from just under 400,000 SMSFs at June 2009, to 414,000 at June 2010, to 440,000 at June 2011, to over 534,000 SMSFs at June 2014, and then to 557,000 as at 30 June 2015, and 577,236 as at 30 June 2016.
Note: Nearly half (45%) of all SMSFs have existed for more than 10 years, and 17% have existed for less than 3 years. The median fund has existed for 9 years. Further, 90% of all SMSFs established in the past 10 years to June 2015 are still in existence.
For more information on the growth in number of SMSFs see the full ATO report (see link at end of article).
Who runs the SMSF show, really?
Individual trustee, or corporate trustee? According to the ATO report, three-quarters (77%) of SMSFs had individual trustees rather than a corporate trustee, as at 30 June 2016. For newly registered SMSFs during the 2016 year, 93% opted for individual trustees. In recent years there has been a shift away from corporate trustees: for each of the financial years ended 30 June 2015, 30 June 2014 and 30 June 2013, more than 90% (92%) of newly registered SMSFs had individual trustees. The ATO notes that for the 2016 year, there has been a slight increase in the uptake of corporate trusteeship, from 5.45% of trustees in 2015, to 7.24% of trustees in 2016.
Accumulation phase, or pension phase? Just over a half (52%) of SMSFs reported they were solely in accumulation phase, while the remaining 48% reported they were making pension payments to some or all members (and so were considered in pension phase), for the year ended 30 June 2015. Of the 48% in pension phase, a quarter were in partial pension phase (that is, 11% of all SMSFs), while three-quarters were in full pension phase (that is, 37% of all SMSFs). In previous reports, the ATO had observed an interesting trend that there had been a continuing shift towards new SMSFs starting pensions in the first year inferring that an increasing number of Australians are setting up SMSFs with superannuation savings from large super funds, transferred on retirement. For the 2015 year, 10% of SMSFs paying pensions to members for the first time were in the first year of operation, while 50% had been in operation for 5 years or less (with 23% in operation for less than 2 years). Of the SMSFs that had been established in the past 10 years to 30 June 2015, 69% had not started making pension payments.
Approved SMSF auditors. Approximately 6,100 approved SMSF auditors were involved in the SMSF sector as at 30 June 2015, conducting 74 audits each, on average. More than half (53%) of all SMSF auditors performed between 5 and 50 SMSF audits, and 28% of SMSF auditors performed between 51 and 250 audits.
Tax agents and accountants. Around 13,600 tax agents and accountants looked after SMSFs as at 30 June 2015, with 99% of 2015 SMSF annual returns lodged by a tax agent. Tax agents and accountants had an average of 32 registered SMSF clients, although it is worth noting that half of the tax agents looked after 10 or fewer SMSFs, while 15% (around 2000 tax agents) had a single SMSF client. What this means is the higher average is skewed by the 7% of tax agents (931) that look after 100 or more SMSFs.
How old, and how wealthy, are SMSF trustees?
According to the ATO report, the average age of an SMSF member is 58 (57.8) years, and the median age is 59 (58.5) years. An interesting trend however is that members of newly registered SMSFs (for 2015 year) have a younger average age of 49 (48.7) years, and a median age of 48 (48.4) years.
The ATO report also states that just over a quarter (26%) of SMSF members are aged 65 and over, while in the non-SMSF sector only 7% of account holders are over 65.
At 30 June 2015, 85% of SMSF members were aged 45 years or older, which then means, obviously, that 15% of SMSF members are under the age of 45. Although for newly established SMSFs (for 2015 year), more than two-thirds of SMSF members (71%) are under the age of 55 (compared with 68% of newly established SMSF members in 2014, and 65% of new SMSF members in 2013, and 51% in 2010).
The gender balance of SMSF trustees is 53% male and 47% female, and 70% of SMSFs have two members, and 23% of SMSFs have one member.
For the year ended 30 June 2015, SMSF members of all ages had a higher average taxable income than non-SMSF members. The average taxable income of all SMSF members in the year ended 30 June 2015 was $107,633, compared to non-SMSF members who had an average taxable income of $58,756. SMSF members aged 35 to 44 had an average taxable income of $120,924 compared to non-SMSF members in the same age group who had an average taxable income of $69,161.
How much money is invested via the average SMSF?
At 30 June 2015, the average assets of SMSFs exceeded $1.1 million, although the median asset size for SMSFs as at 30 June 2015 was $631,000. According to the ATO, the difference between the average and median amounts is explained by the fact that 33% of SMSFs hold assets worth more than $1.1 million (which increases the average).
The average assets of an SMSF was $1,111,732 for the 2015 year, while the average starting balance for a new SMSF (reported by funds established during the 2015 financial year) is $391,952.
The average SMSF member balance was $589,636 as at 30 June 2015. The average SMSF member balance for a new fund established during the 2015 year was $200,190.
For more information on the age, income and wealth profile of SMSF members see the full ATO report (see link at end of article, or check out SuperGuide article Do you fit the latest profile of a ‘typical’ SMSF trustee?
What do DIY super fund trustees invest in?
As at 30 June 2015, just under 60% (56.6%) of all SMSF assets were invested in 2 asset classes – Australian listed shares (31.0%) and cash and term deposits (25.6%). According to the ATO, the move away from cash and term deposit continues with a drop of 2 percentage points during the 2015 year, which continues the trend of 2 percentage point drop that occurred in 2014 year, and in the 2013 year.
Note: For the 2015 year, 6.0% of SMSFs reported assets held under limited recourse borrowing arrangements (LRBAs), an increase of 3 percentage points from the 2013 year (and only a slight increase from the 2014 year – 5.7% of SMSFs reported holding assets under LRBAs). The LRBAs were predominantly used to invest in Australian residential property and overseas shares, and 91% of all LRBA investments were in real property. Assets held under LRBA, represented 3.4% of total SMSF assets for the year.
For the year ended 30 June 2015, just under half (48%) of SMSFs were in pension phase only (and from these SMSFs, 11% of all SMSFs, or just under a quarter of SMSFs in pension phase, were in both pension and accumulation phase). Significantly, 70% of all SMSF assets are held by members in pension phase.
For more information on the types of SMSF investments and the typical asset allocation see the full ATO report (see report link at end of article), or check out SuperGuide article SMSF investment: What assets do DIY super trustees prefer?
How well do SMSFs perform?
Over the 9-year period to 30 June 2015, large funds outperformed SMSFs funds delivering 5.26% a year on average, compared with 5.1% for large funds. The so-so long-term performance for both sectors is due to the Global Financial Crisis destroying the returns for 2 of those years within the timeframe.
Year by year, large funds outperformed SMSFs in 6 years out of 9, while SMSFs outperformed large funds in 3 years out of 9. Note that for the financial year ended 30 June 2012, both SMSFs and large funds delivered a return of 0.4%, until the ATO recently adjusted the annual return for SMSFs for that year to 0.3%.The table below lists the investment returns for each year for both large funds and for SMSFs.
Note: According to the ATO, the larger the SMSF, the better the investment return.
|Financial year||SMSFs (%)||Large funds (%)||Outperformer|
|2008||-5.9% (loss)||-8.1% (loss)||SMSFs|
|2009||-6.7% (loss)||-11.5% (loss)||SMSFs|
|2012||0.4%||0.4%||SMSFs and large funds|
Note: While the methodology used to estimate SMSF performance resembles APRA’s, the data collected is not the same. The data in the table above is sourced from seven ATO reports: SMSFs — A statistical overview 2014-2015, SMSFs — A statistical overview 2013-2014, SMSFs – A statistical overview 2012-2013, SMSFs – A statistical overview 2011-2012, SMSFs – A statistical overview 2010-2011, SMSFs-A statistical overview 2009-10, and SMSFs – A statistical overview 2008-09.
How much do SMSFs cost?
Almost two-thirds (59.7% for 2015) of SMSFs had an estimated operating expense ratio of 1.5% or less, with just under half of SMSFs (45.7%) having an operating expense ratio of less than 1%, and more than a quarter of SMSFs (26.3%) having an expense ratio of less than 0.5% (that is a half of 1%).
The average operating expense ratio had fallen steadily in percentage terms over the 4 financial years from 2008 to 2011, and remained steady for the financial year ended 30 June 2012. From the 2013 year however, the average operating expense ratio jumped, since the ATO now includes expenses that super accounts in pension phase cannot claim as tax deductions. In the past, these expenses were not included in the statistics.
According to the ATO, SMSFs in pension phase had estimated average operating expense ratios of $12,600 compared with SMSFs in accumulation phase with AOER of $11,700.
More specifically the average operating expense ratio for each financial year (sourced from previous ATO reports and the current ATO report) was as follows:
- For year ended 30 June 2008 (0.69% or $6,500 in dollar terms)
- For year ended 30 June 2009 (0.58% or $5,100 in dollar terms)
- For year ended 30 June 2010 (0.57% or $5,000)
- For year ended 30 June 2011 (0.56% or $5,300)
- For year ended 30 June 2012 (0.56% or $5,600)
- For year ended 30 June 2013 (1.03%, or $10,200)
- For year ended 30 June 2014 (1.06%, or $10,700)
- For year ended 30 June 2015 (1.10% or $12,230)
Note: The ATO has since revised the average operating expense ratio for the years ended 30 June 2011 (to 0.63%), 30 June 2012 (to 0.67%), 30 June 2013 (to 1.06%), and 30 June 2014 (to 1.10%).
Note: SMSFs with fund balances of less than $50,000 had a 12.55% average operating expense ratio compared to SMSFs with fund balances of more than $500,000 and less than $1 million, with an average expense ratio of 1.43%, and compared with SMSFs with $2 million-plus balances, with an AOER of 0.62%.
SMSF audit fees: The average SMSF audit fee was $754 for the year ended 30 June 2015, compared with $724 for the year ended 30 June 2014, and compared with $737 for the year ended 30 June 2013, and compared with $571 for the 2012 year, $596 for the 2011 year, and $623 for the 2010 year. For the 2015 financial year, 37% of SMSFs paid less than $500 to approved auditors for audit fees, and 50% of SMSFs paid $500 to $999 for audit fees, while 2.6 paid more than $2,000 or more (compared with 4% of SMSFs for the 2008 year).
For more information on SMSF costs see the full ATO report (see report link at end of article), or check out SuperGuide articles SMSF: How much does a DIY super fund cost? and Super fees: how much should a fund charge you? and Are SMSF audits too expensive?
How much do SMSF members contribute?
According to the ATO, over the 5-year period to 30 June 2015, super contributions to SMSFs averaged $26.6 billion a year, with $20 billion of those contributions made by fund members, and $6.6 billion made by employers. Super contributions were paid into the super accounts of 62% of SMSF members.
As at 30 June 2015, the $33 billion of SMSF super contributions represented 24% of all super fund contributions. SMSF member contributions represented 51% of all member super contributions across all super funds during the 2015 year, while SMSF employer contributions represented only 8% of all employer contributions across all super funds during the 2015 year.
Total contributions made to SMSFs over the 5 years to 30 June 2015 increased by 38%, which was 6 percentage points higher than the 32% growth in total contributions experienced by all super funds.
How much do SMSF members receive in benefit payments?
During the 2015 year, the average benefit payment per fund was $126,000 and the median payment was $62,900. Both average and median payments increased by 34% and 32% respectively over the 5-year period to 30 June 2015.
In 2015, 94% of benefit payments were paid as pension payments (compared with 79% in 2010), while the remaining 18% were paid as lump sums.
Transition-to-retirement pensions (TRIPs) represent 12% of all pension payments (an increase from the 10% of payments in 2010, and 11% of payments in 2011), and SMSF members receiving TRIPs represent 19% of those receiving pension payments (compared with 17% in 2010, and 18% in 2011).
According to the ATO, the average benefit payment per member increased each year, to $77,000 in 2015, compared with $61,350 in 2010, and $62,000 in 2011. The largest payments were received by those 75 years and over (average of $91,660). The profile of SMSF member receiving pension payments over the period from 2010 to 2015 became older: 33.4% of SMSF members receiving benefit payments were aged 70 years or over (compared with 23% in 2010), while 56% of SMSF members receiving benefit payments were aged 60 to 69 (compared with 62% in 2010).
For more information on the SMSF statistics discussed above, you can access the ATO reports by clicking on the links below:
- Self-managed super funds: A statistical overview 2014-15
- Self-managed super funds: A statistical overview 2013-14
- Self-managed super funds: A statistical overview 2012-13
- Self-managed super funds: A statistical overview 2011-12
- Self-managed super funds: A statistical overview 2010-11 (no longer available online)
- Self-managed super funds: A statistical overview 2009-10 (no longer available online)
- Self-managed super funds: A statistical overview 2008-09 (no longer available online)