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Self-managed super funds (SMSFs) in Australia are privately run super funds that historically can have between one and four members (who must also be trustees of their fund).
The government proposed allowing SMSFs to have up to six members, but legislation has been delayed. The passage of the Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020 increased the maximum number of members allowed in SMSFs and small APRA funds from four to six from 1 July 2021.
According to the ATO, around 70% of SMSFs have two members, typically a married couple, followed by 23% with just a single member. Those with three or four members each made up just 4% of funds, indicating that there may not be much demand for the recent increase in the maximum number of members allowed to six.
How many SMSFs are there?
The latest available ATO figures indicate there were 586,773 SMSFs in Australia in March 2020. This is an increase of 15% over five years.
The table below highlights that while the total number of SMSFs and members are growing steadily, the rate of growth is slowing. The rate of growth in new funds has fallen 41% from around 34,000 in 2014-15 to 20,000 in 2018-19. Over the same period, wind-ups had been increasing although the ATO comments that the unusually low figure for 2018-19 does not include complete lodgement data.
Number of SMSFs
| Year ended | Establishments | Windups | Net establishments | Total number of SMSFs | Total members of SMSFs |
|---|---|---|---|---|---|
| June 2019 | 20,427 | 13,544 | 6,833 | 581,231 | 1,090,467 |
| June 2018 | 25,381 | 23,927 | 1,454 | 574,348 | 1,076,982 |
| June 2017 | 30,352 | 14,508 | 15,844 | 572,894 | 1,079,734 |
| June 2016 | 32,810 | 13,385 | 19,425 | 557,050 | 1,049,544 |
| June 2015 | 33,743 | 13,600 | 20,143 | 537,625 | 1,017,776 |
Source: ATO
As at March 2020 the nearly 600,000 SMSFs in Australia had a combined total of 1.119 million members. Although this represents less than 5% of Australia’s population, they accounted for $676 billion, or about 25% of the $2.7 trillion invested in superannuation. This is less than the $717 billion invested in industry funds, but more than the $524 billion in public sector funds and the $558 billion invested in retail funds (that is, those run by financial institutions).
What is the average SMSF balance?
The average account balance of individual SMSF members has been steadily increasing in recent years, as indicated in the first row of the table below. Bearing in mind that the majority of SMSFs in Australia have two members, the average combined balance of SMSF fund members is provided in the second row of the table. These are the latest figures available.
| 2017-18 | 2016-17 | 2015-16 | 2014-15 | 2013-14 | |
|---|---|---|---|---|---|
| Average assets per member | $678,621 | $636,926 | $581,355 | $569,988 | $543,556 |
| Average assets per SMSF | $1,271,356 | $1,199,263 | $1,096,521 | $1,076,894 | $1,028,682 |
Source: ATO
ATO figures further reveal that the average assets per member in the establishment year of an SMSF was $214,104 in 2017-18. This is consistent with the generally held view that the cost of setting up and running an SMSF may be prohibitive for members in funds with lower balances.
The vast majority (84%) of SMSFs in Australia have balances greater than $200,000, as indicated in the table below.
| SMSF asset balance | Percentage of SMSFs |
|---|---|
| Under $50k | 5.6% |
| $50k – $100k | 2.9% |
| $100k – $200k | 7.1% |
| $200k – $500k | 22.4% |
| $500k – $1m | 25.0% |
| $1m – $2m | 20.4% |
| $2m – $5m | 13.1% |
| $5m – $10m | 2.7% |
| More than $10m | 0.8% |
Source: ATO
How long has the average SMSF been operating?
More than half (53%) of the SMSFs in Australia have been operating for more than ten years, as shown in the following table.
| Operating time | Percentage of SMSFs |
|---|---|
| Less than 1 year | 3.1% |
| 1–2 years | 4.0% |
| 2–3 years | 4.7% |
| 3–5 years | 10.1% |
| 5–10 years | 24.6% |
| More than 10 years | 53.3% |
Source: ATO
Age of SMSF members
Perhaps surprisingly, the age ranges of SMSF members are fairly evenly spread between the ages of 35 and 84, as indicated in the table below, but there is a concentration between the ages of 55 and 69. The average age is 59.
| Age bracket | Percentage of SMSF members |
|---|---|
| Under 25 | 0.5% |
| 25–34 | 3.2% |
| 35–44 | 11.2% |
| 45–49 | 10.1% |
| 50–54 | 11.3% |
| 55–59 | 13.2% |
| 60–64 | 13.3% |
| 65–69 | 13.1% |
| 70–74 | 11.8% |
| 75–84 | 10.4% |
| 85+ | 1.8% |
Source: ATO
SMSF trustee structures
According to the most recent statistics from the ATO, approximately 61% of all SMSFs have corporate trustees while the remainder have individual trustees. A corporate structure is becoming increasingly popular. In the three years to 30 June 2019, 82% of new funds were set up with a corporate trustee.
SMSF phases
A majority of all the SMSFs in Australia (57%) were solely in the accumulation phase (that is, solely accepting contributions by or on behalf of members) in 2017-18, while the remaining 47% of funds were either partially (9%) or fully (34%) in the retirement phase (formerly called the pension phase). This was a 3% increase in members wholly in retirement phase, as the baby boomer bubble gradually leave the workforce.
The bottom line
Self-managed super funds are now firmly entrenched in the Australian superannuation landscape. The number of SMSFs has continued to rise in recent years, along with individual member and overall fund balances. Most SMSFs have been operating for more than ten years and have corporate trustees, with this structure becoming increasingly popular. SMSFs typically have two members and an increasing number are moving from accumulation phase to the retirement phase, reflecting Australia’s ageing population.
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