Overview for SMSF sector. Self-managed superannuation funds A statistical overview

Transcription

1 Overview for SMSF sector Self-managed superannuation funds A statistical overview NAT

2 OUR COMMITMENT TO YOU We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. If you feel that this publication does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us. We regularly revise our publications to take account of any changes to the law, so make sure that you have the latest information. If you are unsure, you can check for more recent information on our website at or contact us. This publication was current at December ABOUT THIS GUIDE Disclaimer While the Australian Taxation Office (ATO) tries to ensure the quality of this publication, the ATO does not accept any responsibility for the accuracy, completeness or currency of the material included in this publication, and will not be liable for any loss or damage arising out of any use of, or reliance on, this publication. Forthcoming issues Advice of the future release of Self Managed Superannuation Funds (SMSFs) statistical publications will be made available at Revisions This publication includes data reported for previous years based on SMSF returns. The ATO has since revised SMSF data from 2004 onwards. As much of the data is either estimates or based on lodgments it will be likely to change in future releases of this statistical overview. Appendixes The appendixes will assist in understanding the source and differences in data methodology. Acknowledgements A Statistical Summary of Self Managed Superannuation Funds; Super System Review 10 December 2010 Self Managed Superannuation Funds Overview: A paper presented at the Tenth Annual Colloquium of Superannuation researchers July 2002; Matthew Roberts ATO. Contact For comments or enquiries on this report SPR_smsfstats@ato.gov.au AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA, 2011 You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). PUBLISHED BY Australian Taxation Office Canberra December 2011 JS 22246

3 CONTENTS INTRODUCTION SMSF ASSETS 12 EXECUTIVE SUMMARY INVESTMENT PERFORMANCE 15 GROWTH OF SMSF SECTOR OPERATING EXPENSES 16 SMSF MANAGEMENT 7 04 MEMBER DEMOGRAPHICS 8 08 COMPLIANCE 17 APPENDIX 1 DATA TABLES 18 APPENDIX 2 DATA ISSUES 36

4 INTRODUCTION INTRODUCTION PURPOSE As part of the Super System Review (the Review), A Statistical Summary of Self Managed Superannuation Funds was released on 12 December The majority of the Self Managed Superannuation Funds (SMSFs) information included in that paper was sourced from both publicly available and previously unpublished ATO data. This publication updates the Super System Review statistical summary using year data. We propose to provide annual updates. Where appropriate, we refer to Australian Prudential Regulation Authority (APRA) data for comparisons to the SMSF sector. BACKGROUND The ATO began regulating SMSFs in the 2000 financial year under the regulatory framework of the Superannuation Industry (Supervision) Act 1993 (SIS Act). For information on what constitutes an SMSF and the ATO s regulatory role, go to Traditionally, SMSF data was collected on the super fund income tax return. From 2008, a new SMSF annual return (SAR) was developed to enhance regulation of SMSFs and collect more reliable data. Generally the data for this overview has been collected from: SAR SMSF registrations Auditor Contravention Reports (ACRs) lodged by approved auditors. 2 SMSFs A STATISTICAL OVERVIEW

5 EXECUTIVE SUMMARY 01 The SMSF sector remains the largest sector of the Australian superannuation industry, with 99% of the number of funds and over 30% of the $1.23 trillion total super assets 1. At 30 June 2010, there were around 425,000 SMSFs and almost $387 billion in assets. 2 There were also approximately 810,000 members in the SMSF sector, about 7% of roughly 11.6 million members in Australian super funds. 3 The data shows the SMSF sector responds to government initiatives or changing economic circumstances, particularly in relation to total asset holdings and shifts in asset types held. This is not inconsistent with the general view that SMSF trustees establish SMSFs for control and flexibility. Such observations take into account that 2010 data is not yet included in the majority of this overview s analysis. In recent years there has been a trend for members of new SMSFs to be from younger age groups than those of the total SMSF member population. Overall, SMSF members compared to non-smsf fund members tend to be older and have both higher average balances and higher average taxable incomes. SMSFs directly invested 76% of their assets, mainly in cash and term deposits and Australian listed shares (a total of almost 59%). Estimates of the return on assets for the SMSF sector show negative returns for and This is consistent with the total super industry, although the size of the negative returns was smaller for SMSFs. Estimates of the operating expense ratio of SMSFs shows a direct relationship with the asset size of the SMSF. 1 APRA 2010, APRA September 2010 Quarterly Superannuation Performance, 9 December 2010, (see table Key statistics, p7). 2 ATO 2010, Self-managed super fund statistical report, December Australian Bureau of Statistics 2007, Employment Arrangements, Retirement and Superannuation, Apr to Jul 2007 (Re-issue), Cat. No , ABS, Canberra, p16. SMSFs A STATISTICAL OVERVIEW

6 01 02 CHAPTER GROWTH OF TITLE SMSF SMALL SECTOR GROWTH IN NUMBER OF SMSFS In the five years to 30 June 2010, SMSFs have been the fastest growing sector of the Australian superannuation industry. During this period total super assets grew by 60%, while SMSF assets grew by 122%. 4 The SMSF sector contributed the largest proportion with 46% of the total 60% growth in super assets. Graph 1 shows the breakdown of the 60% growth in total super asset by fund type, based on APRA data. GRAPH 1: Proportion of 5 Year Total Superannuation Growth by fund type SMSFs 46% Between the years ended 30 June 2005 to 30 June 2010, SMSF numbers have grown by 47% (see appendix 1 table 3). Graph 2 shows the most significant growth (13%) occurred in the year ended 30 June 2007, coinciding with the introduction of the government s Superannuation Simplification measures. 5 By 2009 the growth rate had dropped to 2006 levels, most likely influenced by global economic circumstances. SMSF numbers stabilised in 2010, reflecting the improvement in community confidence. GRAPH 2: Growth in the number of SMSFs from 2005 to Industry 23% 10 5 Public Sector 10% Corporate 1% Retail 21% Note that percentage figures add up to 101% as Other funds (including SAFs) experienced negative growth of -1% which is not depicted in the graph Financial year The overall growth in SMSF asset holdings can be attributed to continued establishment of new SMSFs, increase in contributions and net rollovers into SMSFs, and investment earnings (SMSF investment performance is discussed in section 7). Over this period, net establishment of new funds (establishments less wind ups) averaged over 25,000 a year (or approximately 2,100 a month) while wind ups averaged over 5,000 a year. Overall, net establishments show a similar pattern as total fund numbers as establishments peaked in 2007 and windups peaked in Despite the continued establishment of new SMSFs, the majority of SMSF funds have existed for over 10 years (41.8%) with 20.4% having existed for three years or less (see appendix 1, table 4). 4 APRA 2011 and APRA 2006, APRA June 2006 Quarterly Superannuation Performance, 28 September 2006 (see table Key statistics, p7), APRA June 2010 Quarterly Superannuation Performance, 9 September 2010 (see table Key statistics, p7). 5 In 2006 Government announced major reforms known as Superannuation Simplification which included a suite of measures aimed to simplify complexities faced by retirees, improve retirement incomes and provide greater flexibility. 4 SMSFs A STATISTICAL OVERVIEW

7 02 GROWTH OF SMSF SECTOR CONTRIBUTIONS TO SMSFs Over the five year period to 30 June 2009, contributions to the SMSF sector averaged $32.5 billion a year (member $23.6 billion, employer $8.9 billion, see appendix 1, table 1). Contributions peaked in the year ended 30 June This was the same year the Super Simplification measures abolished reasonable benefit limits and introduced a $1 million transitional contribution limit. SMSF member contributions consistently exceeded employer contributions during this five year period by approximately three to one. Since 2007, annual employer contribution amounts to SMSFs have remained relatively constant. In comparison, the amount of member contributions have varied from 84% of contributions made in 2007, to 69% and 63% in 2008 and 2009 respectively (see appendix 1, table 1). Over the five years, most member contributions have been to SMSFs with assets worth between $500,000 and $5 million. Employer contributions have been spread mostly across SMSFs with assets worth between $200,000 and $2 million. This is particularly evident in the years ended 30 June 2008 and 30 June 2009 (see appendix 1, table 1). Graph 3 compares contributions to SMSFs proportionately to all super fund contributions for the years ended 30 June 2005 to 30 June 2009 as reported by APRA. 6 It shows contributions to SMSFs over the five years have generally remained under 30% of total super contributions. In 2007 however, the surge in member contributions saw SMSF contributions increase to 41% of total contributions. Overall, for the five years to 30 June 2009, the proportion of member contributions to SMSFs have generally trended upwards. Note that more recent events and data from the year ended 30 June 2010 onwards are not included in this overview. It is anticipated that government initiatives such as the halving of the caps on concessional contributions introduced from the year ended 30 June 2010 will slow the growth trend in member contributions. GRAPH 3: Contributions to SMSFs as a percentage of Total Australian superannuation contributions (member, employer and total) Member Contributions to SMSFs Employer Contributions to SMSFs Total Contributions to SMSFs* 2007 Financial year 2008 * The percentages are calculated as: SMSF (Member/Employer/Total) contributions/total Australian (Member/Employer/Total) contributions APRA 2010, APRA September 2010 Quarterly Superannuation Performance, 9 December 2010, (see table Financial Performance- Trends, p28). SMSFs A STATISTICAL OVERVIEW

8 02 GROWTH OF SMSF SECTOR SMSF ROLLOVERS For the five years to 30 June 2009, the $50.4 billion rolled into SMSFs consistently exceeded the $14.2 billion rolled out of SMSFs (see appendix 1, table 2). On average it is reported over $10.1 billion is rolled into SMSFs and $2.8 billion is rolled out of SMSFs annually. ATO data does not distinguish between amounts rolled between SMSFs and that rolled to or from non-smsfs. However, the net result is an inward rollover amount of $36.1 billion over the five years. Graph 4 shows inward rollovers trended upwards at a faster rate than outward rollovers, particularly up to the year ended 30 June 2008, and levelled off in GRAPH 4: Total SMSF rollovers 20 SMSF NET FLOWS The overall net inflow into SMSFs was $142.9 billion during the five years to 30 June Graph 5 shows that in all years, this is predominantly attributable to contributions made to SMSFs and in particular the surge in contributions in the year ended 30 June Net transfers and benefits have tended to have limited impact on total SMSF flows. Up to 2007, annual net flows directly reflected the amount of contributions received. In the two years after 2007 however, benefit payments trended upwards at a faster rate, affecting total net flows. Prior to 2007, benefit payments as a percentage of total contributions were between 30-40% ( ), while after 2007, they were between 55-60% ( ). 7 GRAPH 5: Breakdown of SMSF fund flows Inward Outward Financial year * Net fund flow = Total contributions + Net transfers (inward outward rollovers) Benefit payments 7 ATO 2010, Self-managed super fund statistical report, December SMSFs A STATISTICAL OVERVIEW

9 SMSF MANAGEMENT 03 TRUSTEE STRUCTURE SMSFs can be established with either a corporate trustee (where all members of the SMSF are directors of the corporate trustee) or with individual trustees (where all members of the SMSF are trustees). At 31 December 2010, around 73% of SMSFs had individual trustees rather than a corporate trustee (see appendix 1, table 5). Graph 6 shows that in recent years there was a noticeable shift away from corporate trustees, with almost 90% of newly registered SMSFs in the year ended 30 June 2010 established with individual trustees. SMSF PAYMENT PHASE For the year ended 30 June 2009, almost 70% of SMSFs reported they were solely in the accumulation phase, whereas just over 30% reported they were making pension payments to some or all members and so considered to be in the pension phase. 8 Those SMSFs which commenced pension payments in 2009 had, on average, been established for at least five years. Of SMSFs commencing pension payments in 2009, almost 49% were over five years old, less than 39% were less than two years old and almost 11% were operating in their first year. 9 GRAPH 6: SMSF trustee structure All SMSFs Corporate trustee Individual trustee SMSFs established in 2010 SERVICE PROVIDERS All SMSFs must have their financial accounts and compliance with the SIS Act audited annually by an approved auditor. Hence, approved auditors play a key role in ensuring SMSF compliance with regulatory obligations. At 30 June 2008, it is estimated there were over 11,000 approved auditors, who conducted about 33 audits on average in the year ended 30 June Of these, 39% performed less than five SMSF audits in There are however, early indicators of a shift towards approved auditors performing the audit of larger numbers of SMSFs (see appendix 1, table 6). In the year ended 30 June 2009, approximately 15% of approved auditors were reported as also providing other services for SMSF clients such as a tax agent, accountant or financial advisor or administrator. Tax agents and accountants also play a significant role in the SMSF sector. As at December 2010, SMSFs were serviced by around 16,300 different tax agents or accountants, with approximately 83% of all SMSFs registered with a tax agent. However, 98% of SMSF annual returns are lodged by a tax agent. 11 Tax agents and accountants have on average 21 registered SMSF clients. The majority have only a small number, with 62% having 10 or less and 21% (or 3, 410) a single SMSF client. In contrast, 4% or 630 tax agents and accountants have registered more than 100 SMSFs (see appendix 1, table 7). 8 Based on 2009 SAR lodged data. 9 Based on 2009 SAR lodged data and ABR data. 10 Based on 2008 SAR lodged data. 11 Based on 2009 SAR lodged data. SMSFs A STATISTICAL OVERVIEW

10 04 MEMBER DEMOGRAPHICS SMSF MEMBERS At 30 June 2010, there were about 810,000 members in the SMSF sector, of whom 54% were male and 46% female. Generally, female members tended to be younger than male members, with a higher percentage falling within all age groups, apart from those 65 and over where males exceeded females by almost 6% (see appendix 1, table 8). Approximately 68% of SMSFs had two members, almost 23% were single member SMSFs and about 4% had either three or four members. 12 At 30 June 2009, almost 25% of SMSF members received pension payments, including members who were fully or partially in the pension phase. 13 SMSF MEMBERS BY AGE At 30 June 2010, 74% of SMSF members were aged 35 to 64, while just over 80% of SMSF members were older than 45 years of age (see appendix 1, table 8). 14 Recently established SMSFs tend to have younger members than the total SMSF member population. Graph 7 shows that of the almost 6,500 SMSFs established in the June 2010 quarter, % of members were aged over 65. In comparison, over 20% of the total SMSF member population were aged 65 and over at June In the June 2010 quarter, members below 35 years of age represented almost 11% as compared to over 5% for the whole SMSF member population. In addition 65% of members of these newly established SMSFs were less than 55 years of age compared to almost 46% of members of all SMSFs. GRAPH 7: Proportion of SMSF members by age range < Age range > 64 Members of new funds (June 2010 quarter) All SMSF members 12 ATO 2010, Self-managed super fund statistical report, December Based on 2009 SAR lodged data. 14 Age ranges used as per ATO 2010, Self-managed super fund statistical report, for comparison purposes. 15 ATO 2010, Self-managed super fund statistical report, June SMSFs A STATISTICAL OVERVIEW

11 04 MEMBER DEMOGRAPHICS SMSF MEMBERS BY INCOME In the non-smsf sector only 3% of account holders are over 65, while in the SMSF sector only 6.1% of members are under 35 years of age (see appendix 1, table 9). 16 Graph 8 provides a comparison of SMSF and non-smsf member ages at June In the SMSF sector 67% of members were over 50 years of age compared to 23% of members in the non-smsf sector. 17 In contrast, there was a higher proportion of members below 50 years of age who held accounts in the non-smsf sector (76%), with just over 33% of SMSF members in this age range. GRAPH 8: Age distribution of SMSF members and non-smsf members as at June The average taxable income of all SMSF members in the year ended 30 June 2009 was almost $86,500. Those aged 35 to 59 had the highest average taxable income of over $100,000 (see appendix 1, table 9). The average taxable income of all other age groups is below $71,000, with members over 65 having the lowest average taxable income of less than $60,000. SMSF members of all ages had a higher average taxable income in 2009 than non SMSF members which was just over $48,900 (see appendix 1 table 9). Graph 9 shows SMSF trustees aged 35 to 49 had the most significant difference in average taxable income, earning $110,000 compared to non-smsf members with below $60,000. For the 35 and under age ranges and those aged 60 and over the difference is relatively consistent. GRAPH 9: Average taxable income of SMSF members and non-smsf members by age range < > Age range Non-SMSF members SMSF members 24 0 < > 65 Age range Non-SMSF members SMSF members 16 Age ranges used are as produced in the APRA Annual Superannuation Bulletin, for comparison between members of SMSF and members of non-smsf funds. 17 APRA 2009, Annual Superannuation Bulletin, APRA Statistics, 10 February SMSFs A STATISTICAL OVERVIEW

12 04 MEMBER DEMOGRAPHICS SMSF MEMBERS BY BALANCE At 30 June 2009, the average SMSF member balance was $439,000 (see appendix 1, table 10), which is almost 20 times the size of the average account balance of non-smsfs of approximately $22, Graph 10 shows that as SMSF members age, their balances increase and their taxable incomes decrease. The average SMSF member balances range from over $50,000 for members under 35 to over $708,000 for those over 65 (see appendix 1, table 9). While the average balance of SMSF members over 60 increases, the proportion of members in the older age ranges declines. The largest proportion of members were aged 50 to 59 with an average balance of just over $440,000. Graph 11 shows that over the five years to 30 June 2009, average SMSF member account balances have grown steadily, peaking with almost $477,000 in 2007 before falling by 7.9% in 2009 to around $439,000. GRAPH 11: SMSF and SMSF member asset sizes GRAPH 10: 2009 Taxable income and average balance of SMSF members by age range SMSF member average SMSF member median SMSF average SMSF median 2007 Financial year < Age range > 65 0 Average balance Average taxable income % of All SMSF members 18 APRA 2009, Annual Superannuation Bulletin, APRA statistics 2010 (Table 11, pg 39). 10 SMSFs A STATISTICAL OVERVIEW

13 04 MEMBER DEMOGRAPHICS SMSF MEMBERS BY ASSET RANGES Over the five years to 30 June 2009, the proportion of members with less than $100,000 asset balances decreased from 35% to 25%. Those with asset balances over $1 million rose from 5% to 10% (see appendix 1, table 11). Graph 12 shows there was a general shift in member accounts towards the larger asset ranges over the five years. The majority of members hold assets of between $100,000 and $500,000 (48.5%). The proportion of members in this range has remained relatively constant over the five year period. GRAPH 12: SMSF member asset sizes over 5 years 120 A comparison however, of the three years ended 30 June 2007 to 30 June 2009 in Graph 13, shows the proportion of member balances within assets ranges below $500,000 rose, while the proportion above $500,000 declined. GRAPH 13: SMSF member asset sizes over 3 years $0 $50k $0 $50k >$50k $100k >$50k >$100k $200k >$100k >$200k $500k >$200k >$500k $1m >$500k >$1m $2m >$1m $2m $100k $200k $500k $1m >$2m >$2m Growth of asset range $0 $50k >$50k >$100k >$200k >$500k >$1m $2m $0 $50k >$50k $100k >$100k $200k >$200k $500k>$500k $1m >$1m $2m $100k $200k $500k $1m Asset size Growth of asset range >$2m >$2m Note that the percentage shifts are not actual, but represent the percentage change. Ranges above $2m are amalgamated as the small numbers greater than $10m tend to distort the findings. Note that the percentage shifts are not actual, but represent the percentage change. Ranges above $2m are amalgamated as the small numbers greater than $10m tend to distort the findings. SMSFs A STATISTICAL OVERVIEW

14 01 05 CHAPTER SMSF ASSETS TITLE SMALL SMSF AVERAGE ASSETS SMSF assets sustained a five year growth period to 30 June 2009, peaking in the year ended 30 June 2007 to almost $912,000, then falling 8.4% to almost $836,000 by 30 June 2009 (see appendix 1, table 10). This compares to the median SMSF asset size by 30 June 2009 of approximately $471,000 (over $509,000 and $493,000 for 2007 and 2008 respectively). The difference between the average and median asset figures reflects the number of SMSFs with over $1m in assets (25% in 2009). As mentioned previously in relation to total SMSF asset growth, the fall in average and median SMSF assets (2008 and 2009) coincided with the global economic downturn. SMSF ASSET RANGES At 30 June 2009, 49% of SMSFs had assets between $200,000 and $1 million (see appendix 1, table 11). Generally over the years ended 30 June 2005 to 30 June 2009, the proportion of SMSF assets across asset ranges follow a very similar pattern to that of SMSF members. Graph 14 shows that for the five year period, the proportion of SMSFs holding assets of less than $500,000 fell, while the proportion of SMSFs holding greater than $500,000 in assets rose. GRAPH 14: SMSF asset sizes over 5 years In contrast, Graph 15 compares the latest three years ended 30 June 2007 to 30 June The proportion of SMSFs with assets below $1 million rose (except those holding less than $50,000) while the proportion with assets above $1 million declined. GRAPH 15: SMSF asset sizes over 3 years $0 $50k $0 $50k >$50k $100k >$50k >$100k $200k >$100k >$200k $500k >$200k >$500k $1m >$500k >$1m $2m >$1m $2m $100k $200k $500k $1m Asset size Growth of asset range >$2m >$2m Note that the percentage shifts are not actual but represent the percentage change. Ranges above $2m are amalgamated as the small numbers greater than $10m tend to distort the findings $0 $50k >$50k >$100k >$200k >$500k >$1m $2m $0 $50k >$50k $100k >$100k $200k >$200k $500k>$500k $1m >$1m $2m $100k $200k $500k $1m Asset size Growth of asset range >$2m >$2m Note that the percentage shifts are not actual but represent the percentage change. Ranges above $2m are amalgamated as the small numbers greater than $10m tend to distort the findings. 12 SMSFs A STATISTICAL OVERVIEW

15 05 SMSF ASSETS SMSF ASSET ALLOCATION At 30 June 2009, the two most significant SMSF asset holdings were in Australian listed shares (29.2%) and cash and term deposits (29.7%) (see appendix 1, table 13). Graph 16 shows that 58.9% of all SMSF assets were directly invested in these two asset classes. GRAPH 16: SMSF asset allocation Listed Shares 29.2% Non-residential real property 11.1% Residential real property 3.6% All Other Assets 5.7% Unlisted Shares 1.2% Listed trusts 5.7% Unlisted trusts 8.9% Other Managed Investments 4.9% Cash and term deposits 29.7% Note that certain asset types have been amalgamated. See Table 18b for the complete list of assets. Graph 17 compares the significant shifts of all SMSF asset holdings between the years ended 30 June 2008 and 30 June Generally over the two years there was a shift away from listed trusts, other managed investments and listed shares towards cash and term deposits and real property (both non-residential and residential). In contrast, there was a corresponding increase in the proportion of SMSFs holding investments in cash and term deposits, listed shares, non-residential property and other assets in particular. Interestingly for listed shares, there was a clear reversal of the shifts in the proportion of assets held and the proportion of SMSFs holding those assets. This indicates that there was an overall reduction in the value of holdings of listed shares over the two years, however more SMSFs invested in listed shares. This was probably a response to economic trends. GRAPH 17: 2008 to 2009 Percentage change of total SMSF assets and of SMSF population holding assets by asset type Listed Other trustsmanaged Cash Investments and term deposits Listed Non-residential Shares real property Listed trusts Other managed investments Cash and term deposits Listed Shares Asset type % Total SMSF assets % of SMSF population holding assets Non-residential real property Residential real property Other assets Residential real property Other assets SMSFs A STATISTICAL OVERVIEW

16 05 SMSF ASSETS SMSF ASSET CONCENTRATION As at 30 June 2009, 76% of the SMSF sector assets were reported as directly invested by the SMSF with just under 20% invested in trusts and managed investment structures. The remaining investments held included overseas and miscellaneous assets such as collectibles or other assets (see appendix 1, table 13). The SMSF asset types were allocated relatively evenly across the SMSFs asset ranges (see appendix 1 table 14). Note that smaller SMSFs were more likely to hold cash and term deposits than larger funds. Larger funds turned towards Australian listed shares and held a relatively larger proportion of non-residential real property and unlisted trusts. Comparing SMSFs in the accumulation phase to the pension phase, just over 30% of SMSFs in the pension phase held almost 49% of reported assets for the year ended 30 June In 2009, SMSFs reporting in the pension phase had very similar assets to SMSFs in the accumulation phase (see appendix 1 table 15). The only obvious change was SMSFs in the pension phase had slightly less property and slightly more listed trust and listed share assets. As at 30 June 2009, just below 11% of SMSFs reported holding all of their investments in one asset class, representing approximately only 5% of all SMSF assets (see appendix 1 table 16). Smaller SMSFs were more likely to hold only one asset class (35% of those with less than $50,000 in assets). This is consistent with the fact that smaller SMSFs held the highest proportion of assets in cash and term deposits, almost 52% for those with less than $50,000 in assets (see appendix 1 table 14). Less than 7% of SMSFs which fall within each asset range over $500,000 hold only one class of asset, (see appendix 1, table 17) indicating that as funds grow, there was a clear tendency to spread investments. 19 Based on 2009 SAR lodgements. 14 SMSFs A STATISTICAL OVERVIEW

17 INVESTMENT PERFORMANCE 06 Care must be taken when using SMSF performance figures, particularly when making comparisons, as SMSF statistical data reported before 2008 is not necessarily reliable. While the methodology used to estimate SMSF performance resembles APRA s, the data collected is not the same. Notwithstanding, the estimated return on assets (ROA) for SMSFs was positive for the year ended 30 June This was followed by negative returns in the years ended 30 June 2008 and 30 June 2009 (16.7%, -6.3% and -6.7% respectively). 20 Comparisons to APRA regulated funds of more than four members showed the same trend for the three years (14.5%, and -11.7% respectively). 21 Graph 18 shows that for the years ended 30 June 2008 and 30 June 2009, most SMSFs experienced a negative ROA (almost 70% of SMSFs in 2008 and almost 72% in 2009). In both years, the highest proportion of SMSFs had ROA of -20% or less. GRAPH 18: SMSF return on assets in 2008 and The estimated SMSF ROA shows a direct relationship between SMSF sizes and asset ranges. The larger the SMSF the more improved the ROA (see appendix 1, table 12). Graph 19 shows the estimated average ROA by the SMSF size for the years ended 30 June 2007 to 30 June Overall, in 2009 the ROA for SMSFs was generally less than 2008 for all size ranges (apart from the $1 million to $2 million range). The continued negative performance in the estimated SMSF ROA in 2009 coincides with the downturn in the world economy. GRAPH 19: SMSF return on assets by fund size $1 $50k $50k $100k$100k $200k$200k $500k $100k $200k $500k $1m $200k $500k $1m Fund size $1m $2m >$2m 0 < -20%. -20% -20% to < to -15% -15% to < to -10% -10% to < to-5% -5% -5% to 0%> 0% > 0% to 5% > 5% > 5% to 10% < -15% < -10% < -5% to 0% to 5% to 10% Return on assets ratio > 10% 20 Calculations based on SMSF 2007 return and 2008 and 2009 SAR reported data. 21 APRA 2009, Annual Superannuation Bulletin, APRA Statistics, June SMSFs A STATISTICAL OVERVIEW

18 01 07 CHAPTER OPERATING TITLE EXPENSES SMALL As with estimated SMSF investment performance data, care must be taken when using the operating expense ratio figures as comparisons may not be meaningful. SMSF statistical data reported before 2008 is not necessarily reliable and while the methodology used to estimate the operating expense ratio is as close as possible to APRA s, the data collected is not the same (see appendix 2). Notwithstanding, the estimated average operating expense ratio of SMSFs fell from 0.72%, to 0.67% and 0.57% over the years ended 30 June 2007, 2008 and 2009 respectively. 22 Average SMSF operating expenses in 2009 were almost $5,300 compared to approximately $6,000 and $6,400 in 2007 and 2008 respectively. SMSFs with less than $50,000 in assets had a 7% average operating expense ratio compared to SMSFs with more than $500,000 in assets that had an average of less than 1% (see appendix 1, table 19). As can be expected, graph 20 shows the estimated operating expense ratio for SMSFs declined in direct proportion to the increased size of the funds. The majority of SMSFs had an estimated operating expense ratio of less than 1% (64.5% of SMSFs in 2009), the highest proportion (almost 36% in 2009) had an estimated operating expense ratio of 0.25% or less (see appendix 1, table 20). Approved auditors play a major role in regulating SMSFs. In the year ended 30 June 2009 the average audit fee was $ Average audit fees varied significantly. For those approved auditors reported as providing other services, their average fee was $942 compared to $612 for those who only completed the SMSF audit (see appendix 1, table 21). In the year ended 30 June 2009, over 50% of SMSFs paid less than $500 to approved auditors for audit fees, while almost 4% paid $2,000 or more. GRAPH 20: SMSF operating expense ratio by fund size $1 $50k $50k $100k$100k $200k $100k $200k $500k$500k $1m $500k $200k $500k $1m Fund size $1m $2m >$2m 22 Calculations based on 2007 SMSF return and 2008 and 2009 SAR reported data. 23 As reported on the 2009 SAR lodgements. 16 SMSFs A STATISTICAL OVERVIEW

19 COMPLIANCE 08 Approved auditors are required to submit to the ATO, as part of the annual audit, Auditor Contravention Reports (ACRs) that disclose SMSF contraventions according to ATO reporting guidelines. These range from administrative contraventions to more serious contraventions, such as breaches in relation to investment in in-house assets. Overall, the percentage of the SMSF population with ACRs from the year ended 30 June 2004 to 30 June 2009 audit years has remained relatively stable at approximately 2% of all SMSFs each year. 24 There were 8,126 SMSFs that had ACRs lodged containing 17,866 contraventions in the year ended 30 June Just under half of these contraventions were reported as rectified. The most common reported contraventions were loans or financial assistance to members (20%), while in-house assets and separation of assets constitute 17% and almost 14% respectively. In monetary terms, these two contraventions represent over 25% and 28% respectively of the reported contraventions up to 2010 (see appendix 1, table 23). The demographic of SMSFs with ACRs generally align with the SMSF population. Analysis shows there is no correlation between the receipt of an ACR and the SMSF asset size, SMSF income range, years since establishment or the structure of the SMSF. 24 As per ATO ACR data as at June SMSFs A STATISTICAL OVERVIEW

20 01 APPENDIX CHAPTER 1 DATA TABLES TITLE SMALL TABLE 1: Contribution flows This table illustrates the total value of contributions to SMSFs during each financial year and the mean and median amounts over those periods, along with contributions by fund size. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the Total Contributions figures used are those reported in the Self-managed super fund statistical report, December 2010 (available at SMSF contributions Total Contributions Mean Contributions Median Contributions Member ($m) Employer($m) Member ($) Employer($) Member ($) Employer($) ,465 4,955 93,695 29,604 5,141 13, ,095 7, ,846 42,291 9,880 17, ,159 11, ,925 56,464 59,914 24, ,301 10, ,213 49,263 25,063 23, ,151 10,486 90,310 47,994 18,954 22,378 SMSF member contributions by fund size (% per year) $1 $50k >$50k $100k >$100k $200k >$200k $500k >$500k $1m >1m $2m >2m $5m >5m $10m >$10m % 0.93% 2.77% 11.68% 20.42% 24.74% 20.22% 9.08% 9.64% % 0.70% 2.57% 11.49% 19.65% 24.66% 23.73% 8.91% 7.86% % 0.18% 0.66% 4.21% 32.30% 23.75% 29.55% 7.53% 1.71% % 0.83% 2.73% 12.80% 22.01% 27.28% 25.78% 6.61% 1.48% % 0.89% 2.99% 13.75% 24.45% 28.11% 23.44% 4.88% 1.01% SMSF employer contributions by fund size (% per year) $1 $50k >$50k $100k >$100k $200k >$200k $500k >$500k $1m >1m $2m >2m $5m >5m $10m >$10m % 4.52% 10.46% 28.40% 26.78% 18.70% 7.86% 0.72% 0.28% % 3.00% 7.79% 23.53% 26.42% 22.70% 12.61% 1.90% 0.71% % 1.81% 4.91% 16.91% 22.08% 24.11% 21.68% 5.50% 2.22% % 2.41% 6.13% 19.92% 24.97% 23.86% 17.77% 3.31% 0.59% % 2.49% 6.33% 20.38% 25.68% 23.83% 16.65% 2.96% 0.48% 18 SMSFs A STATISTICAL OVERVIEW

21 APPENDIX 1 DATA TABLES TABLE 2: Rollover flow (into and out of SMSFs) This table illustrates the total value of rollovers into and out of SMSFs during each financial year and the mean and median amount over those periods and by fund size. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the Total Rollover figures used are those reported in the Self-managed super fund statistical report, December 2010 (available at SMSF rollovers Total rollovers Mean rollovers Median rollovers Inward ($m) Outward($m) Inward ($) Outward($) Inward ($) Outward($) ,568 1, , ,538 39,119 87, ,446 1, , ,348 42,187 90, ,089 3, , ,980 63, , ,728 4, , ,559 83, , ,550 3, , ,807 76,012 85,000 Inward rollovers by fund size (% per year) $1 $50k >$50k $100k >$100k $200k >$200k $500k >$500k $1m >1m $2m >2m $5m >5m $10m >$10m % 3.44% 9.37% 23.22% 25.61% 18.13% 12.29% 3.28% 3.09% % 2.27% 6.85% 21.11% 25.50% 19.86% 15.33% 4.87% 3.14% % 1.31% 4.33% 14.35% 19.96% 23.71% 21.05% 7.62% 7.07% % 1.20% 4.00% 14.84% 21.92% 24.62% 22.08% 7.48% 3.34% % 1.74% 5.10% 17.62% 23.72% 23.92% 19.83% 5.46% 1.93% Outward rollovers by fund size (% per year) $1 $50k >$50k $100k >$100k $200k >$200k $500k >$500k $1m >1m $2m >2m $5m >5m $10m >$10m % 3.50% 4.44% 15.44% 14.28% 15.65% 17.45% 4.99% 11.33% % 2.94% 4.14% 11.55% 13.85% 16.54% 20.56% 10.61% 7.74% % 2.39% 2.14% 7.17% 10.76% 18.13% 26.51% 11.86% 11.83% % 1.77% 2.70% 7.16% 14.23% 23.11% 29.56% 11.88% 2.82% % 1.66% 2.60% 8.10% 15.68% 23.98% 29.77% 8.11% 3.85% SMSFs A STATISTICAL OVERVIEW

22 APPENDIX 1 DATA TABLES TABLE 3: Yearly SMSF population and asset size This table illustrates the: number of SMSFs that were established or wound up during each financial year overall number of SMSFs and members total assets in SMSFs. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the figures used in this table are those reported in the Self-managed super fund statistical report, December 2010 (available at SMSF population and assets annual Establishments 21,730 23,601 44,692 32,089 31,452 29,405 Windups 5,186 5,043 4,078 5,182 7,749 3,502 Net establishments 16,544 18,558 40,614 26,907 23,703 25,903 Total SMSFs 289, , , , , ,300 Total members 556, , , , , ,450 Total assets ($m) 161, , , , , ,931 TABLE 4: SMSF age distribution This table illustrates the age distribution of SMSFs, based on years since their establishment date. SMSF age by establishment (as at 30/06/2010) Proportion of SMSFs In 1st year of establishment 6.4% >1 2 years 6.7% >2 3 years 7.3% >3 5 years 15.5% >5 10 years 21.4% >10 years 41.8% Total 100% Average SMSF age 7 years 20 SMSFs A STATISTICAL OVERVIEW

23 APPENDIX 1 DATA TABLES TABLE 5: SMSF trustee type This table illustrates the trustee structure (either corporate or individual trustees) of the SMSF population at 31 December 2010 plus new registrations for the years 30 June 2008 to Trustee Type All SMSFs as at 31/12/10 New registrations during % Number % Number % Number % Corporate 27.03% 3, % 3, % 3, % Individual 72.97% 29, % 28, % 28, % Total % 33, % 32, % 31, % TABLE 6: Number of audits performed by approved auditors This table illustrates the proportion of approved auditors to the number of audits they performed within the years 30 June 2007 to These figures are estimates based on SMSF income tax and regulatory return form data. No. of audits % 22.8% 21.1% % 18.2% 18.0% % 13.8% 14.3% % 17.1% 17.0% % 13.7% 13.8% % 8.7% 9.2% % 4.2% 4.9% > % 1.5% 1.7% Total 100.0% 100.0% 100.0% Note that the years are the financial years of SMSFs being audited and not when the audit actually took place. SMSFs A STATISTICAL OVERVIEW

24 APPENDIX 1 DATA TABLES TABLE 7: Number of SMSFs registered per tax agent This table illustrates the distribution of tax agents by the number of SMSFs registered as their clients at 31 December No of SMSFs registered Number of tax agents 1 3, , , , , , > Total 16, SMSFs A STATISTICAL OVERVIEW

25 APPENDIX 1 DATA TABLES TABLE 8: SMSF member age ranges This table illustrates the approximate age and gender distribution of SMSF members at 30 June 2010, along with the age distribution of members of SMSFs established in the June 2010 quarter. The age ranges in this table align with those reported in self-managed super fund statistical reports. This is an estimate based on Australian Business Register (ABR) data. To ensure consistency, the percentages of members used for all SMSFs are those reported in the Self-managed super fund statistical report, December 2010 (available at Gender age ranges Age ranges Male Female Total All members of new funds (June 10 Qtr) < % 1.1% 1.1% 1.7% % 4.5% 4.4% 9.1% % 15.4% 14.3% 24.2% % 27.4% 26.0% 30.2% % 34.1% 33.7% 27.3% > % 17.5% 20.6% 7.5% Unknown 0.0% 0.0% 0.0% 0.0% Total 100.0% 100.0% 100.0% 100.0% All ages 53.7% 46.3% 100.0% 100.0% SMSFs A STATISTICAL OVERVIEW

26 APPENDIX 1 DATA TABLES TABLE 9: SMSF member age, balances and taxable income, contrasting with non-smsf member taxable income This table illustrates the approximate age and gender distribution of SMSF members at 30 June 2009, along with the average and median account balances. It also compares SMSF members average taxable income to non-smsf members average taxable income. The age ranges in this table align with those as reported in APRA s Annual Superannuation Bulletin. This is an estimate based on Australian Business Register (ABR) data. Male Female SMSF members % of All SMSF Members Average balance ($) Median balance ($) Average taxable income ($) Non-SMSF members* Average taxable income ($) < % 6.2% 6.1% 50,447 19,724 63,365 38, % 29.1% 27.3% 180,128 93, ,343 58, % 32.5% 31.2% 440, ,035 96,755 56, % 19.3% 19.9% 636, ,353 67,316 45,453 > % 12.8% 15.5% 708, ,070 59,268 41,810 Unknown 0.0% 0.0% 0.0% n/a n/a n/a 27,875 Total 100.0% 100.0% 100.0% 443, ,278 86,430 48,915 All ages 53.5% 46.5% 100.0% *The non-smsf member population are those individuals, excluding SMSF members, for whom the ATO has received a member contribution statement. 24 SMSFs A STATISTICAL OVERVIEW

27 APPENDIX 1 DATA TABLES TABLE 10: Average and median asset sizes This table illustrates the average and median SMSF fund asset sizes and member account balances at the end of each financial year. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the average figures used in this table are those reported in the Self-managed super fund statistical report, December 2010 (available at Average per member $291,729 $347,459 $476,745 $451,552 $439,037 Median per member $185,404 $215,530 $293,444 $275,678 $262,448 Average per SMSF $560,919 $666,968 $911,826 $858,692 $835,580 Median per SMSF $319,164 $376,402 $509,658 $493,618 $471,329 TABLE 11: Asset ranges by fund and member size This table illustrates the approximate distribution of SMSFs by fund asset sizes and by members account balances at the end of each financial year. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the percentages used in this table are those reported in the Self-managed super fund statistical report, December 2010 (available at Asset Ranges per SMSF $0 $50k 12.8% 11.0% 9.0% 9.4% 6.9% >$50k $100k 9.5% 8.1% 6.2% 6.2% 6.4% >$100k $200k 15.5% 14.1% 11.3% 11.5% 12.2% >$200k $500k 27.8% 27.1% 24.0% 24.8% 26.5% >$500k $1m 19.4% 20.7% 21.6% 22.0% 22.9% >$1m $2m 10.6% 12.8% 16.8% 16.0% 15.9% >$2m $5m 3.9% 5.3% 9.3% 8.5% 8.0% >$5m $10m 0.4% 0.7% 1.5% 1.3% 1.1% >$10m 0.1% 0.2% 0.3% 0.3% 0.2% Total 100% 100% 100% 100% 100% SMSFs A STATISTICAL OVERVIEW

28 APPENDIX 1 DATA TABLES Asset Ranges per member $0 $50k 19.0% 15.8% 12.1% 12.0% 12.2% >$50k $100k 15.9% 14.4% 11.7% 12.0% 12.4% >$100k $200k 21.2% 20.3% 17.6% 18.2% 18.7% >$200k $500k 27.3% 28.7% 28.3% 29.3% 29.8% >$500k $1m 11.4% 13.8% 17.7% 17.1% 16.5% >$1m $2m 3.9% 5.3% 9.3% 8.5% 7.8% >$2m $5m 1.0% 1.5% 3.0% 2.6% 2.3% >$5m $10m 0.1% 0.2% 0.3% 0.2% 0.2% >$10m 0.0% 0.0% 0.1% 0.1% 0.0% Total 100% 100% 100% 100% 100% TABLE 12: Average return on assets (ROA) by fund size This table illustrates the average ROA of SMSFs by asset size. The ROA is calculated by determining the net earnings, and comparing this to average assets during the financial year to determine the percentage return on assets. These figures are estimates based on SMSF income tax and regulatory return form data. $1 $50k >$50k $100k >$100k $200k >$200k $500k >$500k $1m >$1m $2m >$2m % 7.74% 10.45% 13.09% 15.03% 16.64% 19.03% % % % -8.87% -7.77% -6.68% -4.72% % % % -9.72% -7.88% -6.36% -5.44% 26 SMSFs A STATISTICAL OVERVIEW

29 APPENDIX 1 DATA TABLES TABLE 13: 2009 SMSF asset allocations This table illustrates the value and proportion of assets held by the SMSF population for each type of asset listed on the 2009 SMSF annual return as well as the mean and median value. It follows that SMSFs will have different asset allocations in individual cases. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the total monetary amounts used in this table are those reported in the Self-managed super fund statistical report, December 2010 (available at ($M) % of total SMSF assets % of SMSF Population holding those assets Mean* ($) Median* ($) Listed trusts 18, % 33.6% 141,043 46,003 Unlisted trusts 29, % 20.0% 388, ,566 Insurance policy % 0.4% 134,511 66,921 Other Managed Investments 15, % 13.8% 296, ,790 Cash and term deposits 97, % 97.3% 252,901 83,897 Debt securities 1, % 3.0% 166,207 50,000 Loans 2, % 3.6% 161,957 48,510 Listed Shares 95, % 67.2% 363, ,312 Unlisted Shares 3, % 8.7% 123,444 30,233 Derivatives and instalment warrants % 1.1% 113,396 28,338 Non-residential real property 36, % 13.9% 671, ,753 Residential real property 11, % 6.1% 487, ,620 Artwork, collectibles, metal or jewels % 1.9% 68,020 20,930 Other assets 11, % 77.2% 37,431 8,433 Overseas shares % 2.5% 81,912 18,431 Overseas Non-residential real property % 0.0% 374, ,396 Overseas Residential real property % 0.1% 273, ,937 Overseas Managed Investments % 0.5% 157,001 48,948 Other overseas assets 1, % 3.7% 96,266 26,741 Total Australian and Overseas Assets 328, % 845, ,329 *Mean and median values are only applicable to those funds that held those types of assets. SMSFs A STATISTICAL OVERVIEW

30 APPENDIX 1 DATA TABLES TABLE 14: 2009 SMSF asset allocations by fund size This table illustrates the proportion of SMSF assets held for each type of asset listed on the 2009 SMSF annual return by the asset size of SMSFs. These figures are estimates based on SMSF income tax and regulatory return form data. To ensure consistency, the percentages used in this table are those reported in the Self-managed super fund statistical report, December 2010 (available at $0 $50k >$50k $100k >$100k $150k >$150k $200k >$200k $500k >$500k $1m >1m $2m >2m $5m >5m $10m >$10m Listed trusts 2.73% 4.28% 5.53% 6.23% 6.77% 6.67% 5.87% 5.13% 4.91% 4.20% Unlisted trusts 2.37% 4.36% 5.34% 5.93% 6.82% 7.47% 8.14% 9.57% 12.65% 14.27% Insurance policy 0.09% 0.11% 0.07% 0.09% 0.07% 0.06% 0.05% 0.06% 0.04% 0.01% Other Managed Investments 2.72% 3.88% 4.57% 5.27% 5.65% 5.50% 4.97% 4.54% 4.01% 6.00% Cash and term deposits 51.71% 44.27% 39.01% 36.83% 31.89% 30.41% 30.10% 28.92% 26.29% 23.22% Debt securities 0.15% 0.19% 0.25% 0.28% 0.38% 0.52% 0.54% 0.72% 0.68% 0.96% Loans 1.44% 1.35% 1.09% 0.63% 0.61% 0.48% 0.54% 0.59% 0.82% 1.58% Listed Shares 26.59% 30.34% 31.75% 31.25% 31.45% 30.77% 29.73% 28.52% 28.22% 26.74% Unlisted Shares 1.83% 1.94% 1.70% 1.45% 1.10% 0.97% 1.01% 1.27% 1.67% 2.50% Derivatives and instalment warrants 0.18% 0.32% 0.34% 0.39% 0.24% 0.16% 0.11% 0.09% 0.16% 0.19% Non-residential real property 0.65% 1.69% 3.02% 4.13% 6.87% 9.15% 11.32% 13.07% 13.26% 11.48% Residential real property 0.18% 0.78% 1.47% 2.05% 3.58% 3.90% 3.80% 3.43% 2.55% 2.27% Artwork, collectibles, metal or jewels 0.78% 0.66% 0.43% 0.38% 0.22% 0.14% 0.13% 0.11% 0.08% 0.10% 28 SMSFs A STATISTICAL OVERVIEW

31 APPENDIX 1 DATA TABLES 2009 $0 $50k >$50k $100k >$100k $150k >$150k $200k >$200k $500k >$500k $1m >1m $2m >2m $5m >5m $10m >$10m Other assets 7.65% 4.94% 4.63% 4.34% 3.70% 3.20% 3.05% 3.20% 3.45% 4.35% Overseas shares 0.28% 0.22% 0.20% 0.24% 0.17% 0.16% 0.17% 0.22% 0.44% 0.83% Overseas Non-residential real property 0.01% 0.03% 0.02% 0.02% 0.02% 0.02% 0.01% 0.02% 0.05% 0.03% Overseas Residential real property 0.06% 0.06% 0.08% 0.05% 0.04% 0.03% 0.02% 0.03% 0.00% 0.00% Overseas Managed Investments 0.12% 0.10% 0.06% 0.08% 0.06% 0.05% 0.08% 0.08% 0.11% 0.35% Other overseas assets 0.48% 0.48% 0.42% 0.36% 0.36% 0.34% 0.36% 0.42% 0.59% 0.91% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% SMSFs A STATISTICAL OVERVIEW