Sent: 15-06-2010 10:06:04
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SMSFs power ahead
In early June the ATO released an update to its Self Managed Super Fund statistics.
By the end of June it would seem that there will be around about 430,000 - 440,000 of these funds.
At the end of March the ATO estimated that there was about $400b invested in these products. The next largest super sector is retail super funds with just over $350b.
The growth in these super funds continues to outstrip all other types of super funds and currently shows no sign of slowing.
I have only heard a few people brave enough speculate on what the SMSF saturation point is. The estimates currently range from 600,000 funds to about 1 million.
Current net new SMSF growth rate per annum is about 24,000. This therefore represents between 8 and 20 years growth from the current $400,000 that already exist.
The latest APRA data, released shows that in March '09 SMSFs made up 28% of total super assets. By March '10 it was now 32% of total assets.
The comparable figures for Industry Funds were 18% for both periods. For retails funds the figures were 28% for both periods. Public sector funds have remained at 14% for the same period. Corporate funds remain at about 5%.
It's useful to remember that in the same period of time the share markets throughout the world improved dramatically. All these non-SMSF sectors assets have grown quite strongly but they have not grown compared to their competitors.
So what do these figures show? Well they are too short a timeframe to show too much.
But the data over a number of years shows that these trends - that is, that SMSFs are growing quite strongly but other sectors are simply marking time - has been gathering steam for sometime.
Can one conclude that the non-SMSF sector without Government fiat they would not have a viable business plan? The answer is quite complicated.
Before compulsory super came in there was the corporate sector funds and a small retail super sector. If government compulsion was removed then it may be that this is the system - and an even stronger SMSF sector - that we would revert to.
What are the chances that compulsory super no longer exists? Well frankly not high. The ALP are going to an election with a proposal to increase the compulsory SG rate. Despite a preference for eliminating the SG, the Coalition didn't make the plunge over their recent 11 years in office.
But perhaps in time if the choice is between the Age Pension or super concessions then my guess is the super concessions wouldn't last too long.
You'd be wrong to assume that such a choice will not arrive during the next 20 or 30 years in Australia. By then this delightful sandwich is will belong to our children!
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
The second edition has just been released.
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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