SMSF segment overview

Size of SMSF sector

• SMSFs make up 99.6% of the number of funds and 30% of the $2.3 trillion total superannuation assets as at 30 June 2017.¹
• There were 597,000 SMSFs holding $697 billion in assets, with more than 1.1 million SMSF members as at 30 June 2017.²
• Over the five years to 30 June 2017, growth in the number of SMSFs averaged almost 5% annually.
• 53% of SMSFs have been established for more than 10 years, and 16% have been established for three years or less.

Growth of SMSF assets

• For the 2015–16 income year, the average assets of SMSFs were just over $1.1 million, a growth of 25% over five years and 3% from 2015.
• Average assets per member grew by 26% over the five-year period to $599,000 in 2016. This was the highest value over the period.
• Average assets per SMSF in their year of establishment increased by 20% from $325,000 for funds established in 2012 to $390,000 for funds established in 2016.
• 49% of SMSFs had assets between $200,001 and $1 million, accounting for 23% of all SMSF assets.
• The majority of SMSF assets were held by funds with assets between $1 million and $5 million, representing 54% of total SMSF assets.

Contributions

• Total contributions to SMSFs increased by 21% over the five years to 2016. This is significantly higher than the growth of total contributions to all superannuation funds (16%) over the same period.
• Member contributions made to SMSFs increased to $25.1 billion or by 31% over the five-year period. While contributions to SMSFs represented 24% of all super fund contributions, SMSFs received 53% of member contributions made across all super funds.
• Employer contributions made to SMSFs fell by 5% over the five years to $7.1 billion in 2016.

SMSF benefit payments

• Benefit payments increased from $22.6 billion in 2012 to $37 billion in 2016. The proportion of SMSF members receiving a benefit payment increased by 16% in 2016.
• In 2016 the average benefit payment was $127,000, and the median payment $62,700.
• In 2016, 94% of all benefit payments were in the form of income stream (including transition to retirement income streams).
• Transition to retirement income streams have remained steady representing 11% of total benefit payments in 2016.

SMSF payment phase

• The majority of SMSFs continued to be solely in the accumulation phase (53%) with the remaining 47% making pension payments to some of or all members.
• Over the five years to 2016, there was a shift of funds moving into the pension phase (4%).
• Of SMSFs that started to make pension payments in 2016, 54% were more than five years old, while 24% were less than two years old.
• Of funds established over the last 10 years to 2016, 70% have not started making pension payments.

SMSF trustee structure

• At 30 June 2017, 57% of all SMSFs had a corporate trustee rather than individual trustees.
• Of newly registered SMSFs in 2015 to 2017, on average 81% were established with a corporate trustee.

SMSF member demographics

• At 30 June 2017 there were 1.1 million SMSF members, of whom 53% were male and 47% female.
• The trend continued for members of new SMSFs to be from younger age groups. The median age of SMSF members of newly established funds in 2016 was 47 years, compared to 59 years for all SMSF members as at 30 June 2017.
• In 2016, SMSF members tended to be older than members of APRA funds and had both higher average balances and higher average taxable incomes.
• The proportion of members receiving pension payments from an SMSF continued to trend upwards. In 2016, 43% of members were fully or partially in pension phase, compared to 35% in 2012.

SMSF member balances

• At 30 June 2016 the average SMSF member balance was $599,000 and the median balance was $362,000, an increase of 26% and 32% respectively over the five years to 2016.
• The average member balances for female and male members were $511,000 and $641,000 respectively. The female average member balance increased by 30% over the five-year period, while the male average member balance increased by 22% over the same period.
• Over the five years to 2016, the proportion of members with balances of $200,000 or less decreased from 42% to 32% of all members.
• In 2016, the majority of members had balances of between $200,001 and $1 million.

SMSF asset allocation

• SMSFs directly invested 80% of their assets, mainly in cash and term deposits and Australian-listed shares (a total of 54%).
• In the five years to 2016, cash and term deposits decreased (by 7%) to 25% of total SMSF assets.
• As fund asset size increased, the proportion of assets held in cash and term deposits decreased significantly while the proportion of assets held in trusts and other managed investments increased.
• SMSFs in the pension phase had similar assets to SMSFs in the accumulation phase. The only noticeable differences are that SMSFs in pension phase tend to slightly favour listed shares, while those in accumulation phase favoured property assets more.

Limited recourse borrowing arrangement (LRBA) assets

• In 2016, 7% of SMSFs reported $25.4 billion assets held under LRBAs, which is slightly higher than in 2015 (6%). The majority of these funds held LRBA investments in residential real property and non-residential real property. In terms of value, real property assets held under LRBAs collectively made up 93% or $23.7 billion of all SMSF LRBA asset holdings in 2016.

SMSF borrowing

• At 30 June 2016, SMSFs held total borrowings of $19.5 billon representing 3% of total SMSF assets. The average amount borrowed increased from $356,000 in 2012 to $372,000 in 2016.

Investment performance

• In 2015–16, estimated average return on assets for SMSFs was positive (2.9%), a decrease from the estimated returns in 2014–15 (6.0%). This was the same as the investment performance for APRA funds of more than four members (2.9%) and remains consistent with the trend for APRA funds over the five years to 2016.

SMSF expenses

• The estimated average total expense ratio of SMSFs in 2016 was 1.21% and the average total expenses value was $13,700.
• The average ‘investment expense’ and ‘administration and operating expense’ ratios were consistent at 0.65% and 0.56% respectively.
• SMSFs in pension phase incurred higher average total expenses than funds solely in accumulation phase.
• In general terms, the average expense ratios for SMSFs declines in proportion to the increase in fund size.

Service providers

• In 2016, SMSFs used the services of around 5,800 SMSF auditors and 13,400 tax agents or accountants to meet their regulatory obligations.
• In 2016, most SMSF auditors performed between five and 50 SMSF audits (53%), and between 51 and 250 SMSF audits (27%).
• There were 5% of SMSF auditors conducting more than 250 audits, representing 45% of total SMSF audits in 2016.

Feature snapshot: SMSFs first lodged in 2012

For the first time, we have produced a feature piece in addition to the usual sections of this report.

This year we decided to look at SMSFs that lodged their first SMSF annual return in 2012 and traced where they were five years later, in 2016.

We identified 36,160 SMSFs that first lodged in the 2012 financial year. Some of the key highlights of this population include:

• 51% reported total assets of $1 to $200,000 in 2012. Comparatively, this asset range made up only 20% of funds still active in 2016.
• By 2016, 93% of these SMSFs were still in existence. Funds which reported between $1 and $200,000 in 2012 made up 68% of wind ups over the five years.
• 12% of funds were in pension phase when they first reported in 2012. This increased to 34% of funds still active in 2016.

See also

• For the full analysis, see SMSFs first lodged in 2012 FY: where are they five years on? (infographic) (PDF, 107 KB)This link will download a file

¹ APRA 2017, June 2017 Quarterly Superannuation Performance, 22 August 2017, page 8
² ATO 2017, Self-managed super fund statistical report, June 2017