What to take from the latest ATO SMSF statistics

Last week saw the release the ATO’s SMSF quarterly statistics (September 2012) which again showed strong growth in fund establishments.  A further 8,183 new funds were setup in the first quarter of 2012-13 financial year, taking the number of SMSFs to 488,576.  Total assets grew to more than $458 billion, which now shows the average SMSF assets at $938,341.

Whilst the continued growth in numbers and dollars of SMSFs continues to be the main story, there were a couple of things I found in my analysis that I thought were interesting and worth highlighting:

Member numbers per fund

Average members per SMSF

Commonly referred to as “Mum and Dad” funds, we know that SMSFs typically operate with an average of just under two members (two member funds represent about 70% of all SMSFs).  With less than 4% of all SMSFs having three or four members, it is interesting to note that there were 2.27 members per fund established for the September 2012 quarter, well above the industry average (1.91 member per fund).  This higher than average number for September does not appear to be a ‘one-off’, as you can see from the above chart – on four occasions since 2008, the September quarter has had establishments where (on average) more than 2 members per fund exist.

Why is it the case?  Good question!!  What do you think?

Are SMSF trustees really switching to property?

Asset allocation percentages

There’s been a lot of talk about the growing interest in property within SMSFs… enough to raise the eyebrows of both ASIC and the ATO, ensuring that trustees are considering all the risks of property investment and the broader issues of the fund’s investment strategy.

The September 2012 quarterly statistics showed growth in property with:

  • Business Real Property (commercial) growing to more than $53 billion (9.45% increase over last 12 months); and
  • Residential property growing to $16.25 billion (9.45%  increase also over last 12 months)

Whilst showing signs of growth, these statistics do not appear to be showing any dramatic shift of trustees moving heavily into property.  In contrast the last 12 months has seen the total assets in listed shares grow by 19.6%, and is again the largest asset held within SMSFs by asset allocation ($141.5 billion).

The acquisition of property using limited recourse borrowing arrangements (LRBAs) also remains quite low statistically as the ‘derivatives and instalment warrants’ label represent only 0.34% of September 2012.  This would also include other forms of derivatives including options, warrants and similar instruments (NB.  ATO requires SMSF trustees to report LRBAs under the ‘derivatives’ label, now LRBA label for reporting purposes within the SMSF Annual Return).  Whether the reporting is done correctly or not, it must be questioned whether much of the property talk in SMSFs is just that… talk!

I’d be interested to hear your views about the latest SMSF statistics – where numbers are heading, what about asset allocations?

You can find out more about the ATO’s SMSF quarterly statistics here.


Has the Government stemmed the flow of SMSFs?

The latest quarterly SMSF statistics released by the Australian Taxation Office for the December 2011 quarter show some slowing in the growth of the self managed super fund market.  The question must be asked:

  • is this a result of SMSFs reaching saturation point; or
  • is it a result of the lack of Government direction and loss of consumer confidence in retirement savings policy?

The latter issue around loss of confidence in superannuation and investment markets was a key theme addressed in the SPAA/Russell research conducted, which produced the annual “2012 Intimate with SMSFs” report.

New establishments for the December quarter were 5,915, the lowest number of setups since statistics have been published on the ATO website (back to June 2008).  On an annualised basis, the 2011 calendar year saw 33,114 new funds established, more than 5% more than the previous year.  When looking at net establishments, this percentage is significantly higher (67% net growth) as we have seen 2,769 funds wound up during 2011.

Total fund assets is again around the $400 billion mark, with growth in both cash held by SMSF trustees and listed shares – the growth in shares may have been a combination of ASX movement and some trustees seeing ‘value’ in the market, both from a growth and yield perspective.

Not surprisingly, we are seeing the most growth in assets in Western Australia, 10.4% of total assets – up from 8.8% back in June 2004.  It doesn’t seem like much, but when the industry was $127 billion in 2004, this represented $11 billion, today this amount is more than $41.6 billion.

The data on younger entrants was still fairly strong for the quarter, 35.1% of new members were under the age of 45.  As I have previously raised in my both presentation at the SPAA conference and also on my blog, many advisers will need to re-think how to deliver education and advice to a younger, more engaged, and web-savvy group of SMSF members.  The scaled advice opportunity in my view presents an exciting time ahead for the SMSF industry.

Details of the December 2011 quarter SMSF statistics can be found here, http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00309172.htm&page=1&H1

These latest growth statistics may just be a ‘blip’ on the radar, so we will continue to watch these SMSF statistics with great interest.

I would be interested in your thoughts whether you think these statistics are a result of SMSFs having peaked or a consumer confidence dropping due to Government using superannuation as a political football?

SMSF Quarterly Wrap webinar

The 2012 year is going to be a significant one for the SMSF industry, so it is important that you keep up-to-date with the latest issues, news, and changes impacting self managed super funds.

The SMSF Academy is pleased to announce the first webinar for 2012, the SMSF Quarterly Wrap. This is a new addition to the regular monthly training for SMSF professionals after seeking feedback from members and webinar attendees.

This webinar is being conducted on Wednesday, 1 February 2012 at 12pm AEDST.

Find out more about this session and to register.

SMSFs continue to grow

The SMSF sector continues to grow with no signs of slowing down.

The Australian Taxation Office has released their June 2011 quarterly statistics regarding Self-Managed Super Funds.  These statistics highlight the growing interest by individuals and professionals towards the SMSF industry.

I have outlined below some of the key highlights and analysis from the June 2011 statistics:

  • Net establishments for the June 2011 quarter were 7,402 (7,466 establishments with 64 wind ups), taking the total number of SMSFs to 456,472.
  • The 2010/11 financial reflected net establishments of 32,619 (33,106 establishments with 487 wind ups).  This represents at 37% increase in the number of SMSFs established compared to 2009/10 financial year (net of wind ups).  The number of new SMSFs established for the financial year is the highest since the ‘one-off’ $1m contribution opportunity in 2007.
  • It is interesting to note the significant drop in wind ups of SMSFs. Year-on-year the number of wind ups has been in-excess of 4,000 (up to 7,000 in June 2009).  With only 487 SMSFs wound up for the 2011 financial year, has the rationalisation of SMSFs that are not appropriate for certain individuals now finished (i.e. are current & new trustees better informed than ever before about an SMSF being appropriate for them?)
  • The average SMSF balance is now $916,746, down from the previous quarter average of $926,196.
  • There has been a $3.284 billion increase in cash and deposits for the quarter, representing 27.28% of fund assets to 30 June 2011.  However, this total fund assets within SMSFs have been “whittled away” by the decrease in listed shares (down $3.653 billion for the quarter).  Shares still however lead the way as the largest single asset class (33.30%).
  • The annual statistics (year-on-year) show that High Net Worth SMSFs (balances > $1m) appear have moved back into the share market, with an increase in exposure to listed shares of between 3.26% ($1 – $2m) to 5.33% ($10m+) (NB.  based on annualised statistics only available to 2010.)
  • The statistical breakdown by fund size is showing a significant increase in the number of $1m+ SMSFs.  During the 2010 financial year, 16,360 SMSFs moved into the magical million dollars of fund assets.  By contrast, the number of SMSFs under $200,000 is reducing, with 24.2% of funds now with balances under this figure.  The biggest drops have been in the under $50k and $50-$100k ranges.
  • The strongest growth in SMSF establishments continues to be in the accumulators, with the 45-54 age bracket representing 29.9% of funds established for the quarter and the 35-44 age bracket with 22.7%.
These statistics continue to show strong support in the use of Self-Managed Super Funds as a retirement savings vehicle.  Whilst reductions in concessional contribution caps have stymied the assets available to get into superannuation, it hasn’t reduced the appetite for SMSFs.
(C) The SMSF Academy 2012
%d bloggers like this: