Though the death of SMSFs may have been regularly predicted in years past, modelling within Deloitte’s Dynamics of the Australian Superannuation System report released in January suggests they will continue to grow, and grow strongly for some time yet.
A current common practice, according to the report, was for people to create their own SMSF upon retirement or earlier, potentially when they received large sums of money from their existing corporate or public sector superannuation plan.
“There are a number of factors that suggest this will continue, including the tax benefits available within an SMSF structure for those transitioning from pre-retirement to post-retirement,” it said.
“(There is also) the potential that Future of Financial Advice (the Future of Financial Advice reforms) makes SMSFs more attractive to financial advisers than the MySuper or choice products found in the retail sector generally.”
As a final comment, Deloitte’s report said that by looking at the asset allocation of the SMSF sector in aggregate, it was clear that retirees did not want to take as much investment risk as those superannuants in the accumulation stage.
“While this may reflect the psychological impact of the GFC [global financial crisis], it will continue to affect the baby boomers as they move into retirement over the next 10-15 years,” it said.
“Those institutions wishing to fight back against the continuing growth in the SMSF sector would do well to consider this issue, and potentially offer more innovative, lower volatility products to this segment of the market.”