More Australians shift to SMSFs

ScreenHunter_04 May. 21 13.20

 

By Martin North, cross-posted from the Digital Finance Analytics Blog

APRA just released their quarterly super statistics to September 2014. Superannuation assets totalled $1.87 trillion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 9.6 per cent increase. Total assets in MySuper products was $378.1 billion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 128.2 per cent increase.

Of these, $1.14 trillion are regulated by APRA and these grew by 2.2% since the previous quarter, whereas $ 557 million are self-managed super assets  managed by the ATO and this grew by 0.2% since June 2014.

SuperSept20141However, the number of SMSFs grew by 1.6% from the previous quarter, to stand at more than 539,000 funds.

SuperSept20142Looking in more detail at the APRA regulated funds, with more than four members, there were $23.6 billion of contributions in the September 2014 quarter, up 7.2 per cent from the September 2013 quarter ($22.0 billion). Total contributions for the year ending September 2014 were $96.8 billion. Outward benefit transfers exceeded inward benefit transfers by $471 million in the September 2014 quarter. There were $15.1 billion in total benefit payments in the September 2014 quarter, an increase of 10.9 per cent from the September 2013 quarter ($13.7 billion). Total benefit payments for the year ending September 2014 were $57.1 billion. Net contribution flows (contributions plus net benefit transfers less benefit payments) totalled $8.0 billion in the September 2014 quarter, an increase of 9.6 per cent from the September 2013 quarter ($7.3 billion). Net contribution flows for the year ending September 2014 were $37.8 billion. Net contribution flows (contributions plus net benefit transfers less benefit payments) totalled $8.0 billion in the September 2014 quarter, an increase of 9.6 per cent from the September 2013 quarter ($7.3 billion). Net contribution flows for the year ending September 2014 were $37.8 billion. The graph below shows the composition of net contribution flows for each quarter from December 2008 to September 2014.

SuperSept20143The annual industry-wide rate of return (ROR) for entities with more than four members for the year ending 30 September 2014 was 8.2 per cent. For the five-years to September 2014 the annualised geometric-average ROR was 6.9 per cent. The graph below shows the ROR for each quarter from December 2004 to September 2014. The rate of return (ROR) represents the net earnings on superannuation assets and measures the combined earnings of a superannuation fund’s assets across all its products and investment options.

SuperSept20144As at the end of the September 2014 quarter, 51 per cent of the $1,219.7 million investments for entities with at least four members were invested in equities; 33 per cent of investments were invested in fixed income and cash investments; 12 per cent of investments were invested in property and infrastructure and 4 per cent were invested in other assets, including hedge funds, and commodities.

Note that small APRA funds (SAFs) and Single Member Approved Deposit funds (SMADFs) do not report quarterly to APRA. Therefore the quarterly assets of these funds are estimated based on the assets they report to APRA in their annual returns. This is done using a straight line growth methodology.

 

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments

  1. Mining BoganMEMBER

    Quite a few of my fellow bogans are going down the SMSF road recently to buy overseas properties. Their advisers set everything up, locate the property, do the haggling and all the legal work. Nothing for them to do except play golf and get rich.

    Couple of years ago it was for houses in mining towns. Moranbah was a favourite. LOL.

      • Mining BoganMEMBER

        Yep, at the moment the guys are going big on US properties. Know a few who have some condominiums in Thailand as well.

        Don’t know who they’re going through but I could find out tonight if you like.

      • MB good luck to the dudes buying condos in Thailand, who knows who will be running the country when the old king kicks the bucket.
        I had several chances to buy there but I’d put it in a similar basket to Spain…

      • Locus of ControlMEMBER

        Interesting trend MB.

        Would be interesting if you could find out who’s steering them in this direction. Esp. to see if they’re being dudded. US property might be okay, but not if they’re buying Detroit!

      • Mining BoganMEMBER

        Snail, yeah, looked at Thai ones myself in a weaker moment. I turned coward.

        Locus, they do seem okay. Texas is being pushed. A few places around Memphis as well which sounded odd to me but I know bugger all about it.

        Can’t do any worse than Moranbah but, can they? Aren’t prices down there by 75%?

      • GunnamattaMEMBER

        Hey @MB

        if you could rustle up the name of an advisory that would be great.

        I have something a tad more radical than Houston in mind…

        I must confess I have always thought the SMSF thing was irrelevant for me, but am thinking that if I go back OS in about 2 years I could roll the lot of my current super (a very good one) into a SMSF and buy an abode offshore (though I dare say there are a zillion things wrong with that idea)

      • Mining BoganMEMBER

        Ok Gunna, the guys are going through a mob called FuturePlan Property. Seems they do houses in and around Memphis.

        Another guy is being led towards Plano in Texas. I don’t know who he deals with but I find that one a bit more interesting.

  2. Must be because “41 year old mortage broker Sandy” on the SBS show First Contact first eposide was telling some lucky client that she would put them into a SMSF as she drove along merrily before she went outback…now as I watched the rest of the show and the second eposide I couldn’t help think,…thank god we got the creme d la creme of Australia working in Financial services….on the other hand maybe she is one of the better type in the financial services industry…imagine if some of the Storm or CBA advisors were in the show, they would have had no shame in signing up a few natives IMHO for a couple of their financial products….just saying

  3. Must be because 41 year old mortage broker Sandy on the first eposide SBS First Contact was telling a client that SMSF would be what they need as she was filmed driving along in her car….before she went outback.

  4. If you’re getting charge $1,000+ in fees then it makes it financially worthwhile to consider SMSF. The parasitic financial sector is forcing its host to shake it off before it’s eaten to death.

    I’d consider SMSF if to own foreign assets at arm’s length from Oz pollies – pension confiscation is writing on the wall so best to make it harder for them to get their dirty filthy paws on the funds/assets.

  5. The issue will all these dheads rushing to SMSF’s, is that they are in many cases being sucked in by their accountants etc, as lets face it, who the fk knows anything about US real estate? seriously.
    The benefit to the accountant is that they just assume a valuation going forward and nothings marked to market. This is the next timbercorp, direct property within super. Big fees, no mark to market, spun to suckers who will cry poor in around 18 months.

  6. ” best to make it harder for them to get their dirty filthy paws on the funds/assets.”

    That’s why I’ve started working for my self again and structured the business to minimise super guaranteed income.

    It’s not worth the up front tax concession, when you lose so much control of “your money”.

    By the time I retire in 2040 ( at 70!) I’ll be lucky to get my hands on an crappy annuity, no pension and no lump sum and what Evers left over when I’m dead will either go to my wife or if she dead too, taxed at 50% and the kids taxed to when they get their hands what’s left.

  7. Set up a SMSF, take a trip to Houston, come around Rodeo time, and get free entrance to it during international week, go to the RICH club (Real Estate Investment Club of Houston) free for your first visit. Check out The Woodlands. Go to http://www.har.com to search for properties for free.

    Come down to the Houston Lonestars (AFL team), Australia Day Picnic or play some Netball.

    Happy to meet up with anyone from OZ, or help out with questions:

    [email protected]

    It is real easy to set things up yourself, lots of free and reliable information available.