Why Are Self Managed Super Funds So Popular?

By Jason Fittler

The latest ATO SMSF statistics make for interesting reading.

The number of new funds established for the 11/12 year was 36,270, the highest in 5 years and the second highest ever.

The number of windups for the same period was 994, the lowest ever by nearly 4,000. This makes the net growth of SMSFs in 2011/2012 nearly 3,000 per month and confirms the increasing popularity of this type of superannuation arrangement.

The total number of funds as at Sept 2012 was 488,576 containing 932,198 members. The average number of members per fund has altered little over the last 8 years at just fewer than two. Only 1% of members are less than 25 years of age with about 16% of fund members being less than 45. The largest demographic is the 55 to 64 age group (33.4%).

From June 2008 to June 2012 fund assets increased by 43% to $458,451 million. As at June 2011 the average fund balance was $963,002. Clearly this has been influenced by some very large funds, as the median balance is $539,486.

Given the amount of recent press attention focused on the rise of residential property investment it is interesting to note that from June 2008 to September 2012, though non-residential investment rose from 9.5% to 11.6%, residential investment has only increased from 3.3% to 3.5% of fund assets.

Recently, there have been many comments on the success of compulsory Superannuation. It has now been in place for 20 years in Australia.

However, it seems Superannuation has been unsuccessful in moving people away from dependence on the age pension.

At present 80% of those at pension age receive some sort of pension, 55% receive the full pension over the next 35 years these figures are expected to fall slightly to 76.4% and 36% respectively.

The problem lies in the fact that some people can save and others cannot. The latter group see super as a windfall gain, which is spent before reaching age pension age.

Self Managed Super Funds (SMSF) seem to be increasing in popularity as the savers realise that Superannuation is a tax efficient way of saving. Plus the SMSF provides them the control over their savings. The same as they would have with normal savings.

With the GFC, the focus has become, not just to maintain a lifestyle in retirement but also enjoy the freedom of not having to work. To do this they have realised that they need to be actively involved in how their super is invested and the risks they are prepared to take.

A SMSF provides many benefits including control, lower fees, lower tax inside superannuation and better advice then you will receive from an Industry fund. It is a combination of all of these issues, which make the difference to the performance for your superannuation over the long-term.

If you and your spouse have combined super assets over $250,000 and have the drive to ensure that you make full use your retirement years, you should start to educate yourself on the benefits of having a SMSF.

As you have seen from the above statistic more and more people are taking control of their retirement.

What about you?

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