The SMSF Professionals’ Association of Australia (SPAA) and Russell Investments' Intimate with Self-Managed Superannuation report, released yesterday, indicates SMSF trustees would have invested an average of $54,136 extra in their superannuation in 2012/2013 if contribution restrictions had not applied.
The report, which analyses trustee and adviser data collected in 2013, also stated that 40.3 per cent of trustees said they will use a different strategy to save for retirement as a result of the concessional contribution cap being set at $25,000.
“Contribution caps [are] forcing people to change the way they think,” said SPAA chief executive Andrea Slattery at a media briefing yesterday. “They are having an extraordinary impact on the future of Australian savings.”
The report also found the proportion of superannuants looking to establish an SMSF within the next five years has dropped by five per cent, from 17.3 per cent in 2012 to 12.3 per cent in 2013. Respondents cited barriers such as insufficient assets as a reason for not setting up an SMSF.
On the investment front, an expected movement away from cash “simply did not occur”, the report stated, with 31.0 per cent allocated to cash and term deposits in 2013 compared with 33.9 per cent in 2012.
In addition, while SMSFs account for much of the growth in the exchange-traded fund (ETF) market, Russell Investments director for client investment strategies Scott Fletcher said at the media briefing that the take-up has been slower than some predicted.
“Even though SMSFs account for a lot of growth in ETFs, it’s fair to say that the spectacular projections are yet to come through,” Mr Fletcher said. “It’s growing, but it’s been a lot slower on the take-up. Part of that has been issues surrounding transparency.”
However, allocations to residential property nearly doubled, increasing from 5.6 per cent in 2012 to 9.9 per cent in 2013, the report stated. Ms Slattery said there was no indication as to whether SMSF borrowing was a factor in the rise.
Broader demographic trends indicate the SMSF sector continues to attract younger trustees. The 41-50 age group remains the largest source of demand, followed by investors in the 31-40 age group, according to the report.
“There is quite a change in the demographic; [younger] people are becoming more interested in their future,” said Ms Slattery. “The continuing strong growth in the younger demographic is both significant and encouraging.”
