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The ATO’s SMSF statistical overview

by Meg Heffron

Last Monday, the Australian Taxation Office (ATO) released a publication called “Self-managed superannuation funds – a statistical overview 2008-09”.  It’s a fascinating document (and not just for people who are interested in numbers).  It provides a snapshot of what the SMSF sector looked like in 2009, based on the returns lodged with the ATO for 2008/09.

(Why are the stats so old, you ask?  Because SMSF returns are routinely lodged so late that these are the most up to date figures!  An interesting piece of trivia – only around 70% of SMSFs lodge on time.  Around 10% are more than 6 months late.  Given that most well behaved SMSFs don’t have to lodge their returns until nearly 12 months after the year end, it’s hard to see how anyone could compile more current statistics.)

There are many interesting numbers in the report.  I’ve written an article for the AFR’s DIY Super site (www.afr.com/diysuper) which should be up there in the next few days that talks about the compliance statistics.

But there are other interesting segments of the report.

I’ve picked a few at random that caught my eye:

  • the message about Corporate Trustees being a better way to go than Individual Trustees is obviously not getting through.  Only around 1 in 10 new funds are set up with a corporate trustee.  If anything that figure has edged fractionally lower in the last three years.  Interestingly, the SMSF universe as a whole has a higher proportion of corporate trustees (2 in 10).  That suggests that either the trend has changed at some point (unlikely I think) OR funds may well be set up with individual trustees but eventually see the light and change.  Having been through this myself, I can safely say that setting it up with a corporate trustee from the beginning is definitely a better bet.
  • proportionately speaking, pension funds don’t have any more cash & term deposits than accumulation funds! (Both have around 30% in cash & term deposits – see Table 15)
  • at 30 June 2009, almost 25% (1 in 4) SMSF members received pension payments.  How the world has changed – wouldn’t it be fascinating to see a comparable statistic from (say) the mid 1990s when cashing out one’s super in full at age 65 was the norm.  However, given that 20% of SMSF members are over 64 and nearly 35% of SMSF members are between 55 and 64, there are still a great many members who could take pensions but are not.  For some of these, that decision will have been made consciously and will be a wise one.  For others, it may just be ignorance.  What a shame to have missed out on one of the greatest tax breaks of our time through ignorance!
  • over 50% of all member contributions to super in Australia are going to SMSFs.  While a high degree of engagement is likely for those making member contributions (and engaged people are more likely to be in SMSFs), the figure still staggers me.  Member contributions for this purpose includes member contributions for which a tax deduction is claimed (eg from the self employed) and of course SMSFs also tend to have a higher proportion of the self employed than public funds.  The ATO report makes the comment that changes to the concessional contributions cap from 1 July 2009 are likely to reduce this proportion in the future but still……
  • median balances were almost back to 2007 levels at 30 June 2009 but where they are today is anyone’s guess. I suspect that much of that 2 year recovery was due to new contributions!  While may commentators note with excitement that average fund balances are over $800,000 I would suggest that number should be ignored as it is meaningless.  Averages are largely useless when it comes to illustrating what a “typical” SMSF really looks like, the median is far more useful.  For example, if we charted the number of chocolates I have eaten in the last 7 days we might have something like this : 2, 3, 6, 1, 5, 4, 27 (oops – Christmas party).  My average chocolate consumption was therefore nearly 7 per day.  If we instead focussed on the median (line up each day in increasing number of chocolates and take the middle number) we would have 4 – which is far more useful in assessing how many chocolates I “typically” eat (well it makes me feel better anyway).  Similarly, average fund balances are obviously affected by the small number of funds with very large balances (and there are certainly plenty of those).  Median balances give us a better picture of what a “typical” fund looks like.  At 30 June 2009 that was around $470,000 for the whole fund or $260,000 per member.

There are many more and the report will no doubt be examined closely by all of us associated with the SMSF sector.  Certainly it continues to support the Cooper Review’s summation of an industry that is largely well functioning.

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  • The ATOs SMSF statistical overview

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