90% increase in SMSF accumulation assets post Transfer Balance Cap

The Transfer Balance Cap has seen a dramatic change in the tax status of SMSF assets, Class Ltd has found.

The introduction of the Transfer Balance Cap – which limits the amount that can be held in pension/retirement phase – has been followed by an almost doubling in accumulation phase assets. Almost 25% of SMSF assets in pension phase have lost that tax-free status.

$200 billion increase in SMSF accumulation phase assets

According to the Class figures – in the June 2018 SMSF Benchmark Report – SMSFs held $222 billion worth of assets in accumulation phase in March 2017, . By 30 June 2018 this figure was $422 billion, a 90% increase. The Transfer Balance Cap applies from 1 July 2017. Read more...

Pension phase SMSFs favouring domestic shares, avoiding property

SMSFs in pension phase allocate more of their assets to domestic shares than funds in accumulation phase, while having less invested in property, new research has found.

SMSFs in pension phase have a stereotype of being more conservative and driven by yield. The latest Class SMSF Benchmark Report has analysed the investment habits of pension and accumulation phase SMSFs to find if this was actually the case.

The research found that pension SMSFs (which Class defines as having at least one member in pension phase) have a strong preference for domestic shares over international ones. They hold 33% of gross assets in domestic equities compared to 23% for accumulation funds. Only 1.0% of gross pension SMSF assets are held in international shares, compared to 1.2% for accumulation SMSFs. Read more...

Boomers and Gen X hardest hit by 2016 changes to superannuation

Baby boomers and older members of Generation X are the hardest hit by the changes to superannuation from the 2016 Budget.

The March 2017 Class SMSF Benchmark Report finds that the changes legislated late last year most affect older people who haven’t benefited from superannuation contributions for their whole working life. These people particularly depend on higher contributions caps to make catch-up superannuation contributions.

Treasury said that the lower concessional contributions cap would affect “around” 3.5% of Australia’s superannuation account holders. However Class calculates that this change will affect 25.9% of SMSF members over the age of 49 – this is the proportion that made concessional contributions over $25,000 in the 2014/15 financial year. Read more...

SMSFs are “no threat” to homebuyers: Class SMSF Benchmark Report

SMSFs are no threat to homebuyers, according to analysis in the latest Class SMSF Benchmark Report.

The Class SMSF Benchmark Report for the December 2016 quarter found that SMSFs own less than 1% of the residential property in Australia, compared to the 22% owned by non-SMSF investors and 68% belonging to owner-occupiers. 5% is public housing and 4% is classified as ‘other’.

This corresponds to SMSFs holding about $64 billion of residential Australian property, while the whole market is estimated at $6.7 trillion. Read more...

Demise of investment platforms for SMSFs “premature”, says Class Super

Predictions of the demise of investment platforms in the SMSF market have been, at least, “premature”, according Class Ltd.

The latest Class SMSF Benchmark Report finds that investment platforms have maintained their share of SMSFs over the past two years, though there has been a shift towards non-aligned platforms.

The September quarter report finds that 18.5% of SMSFs on Class Super use an investment platform, including wraps, Individually Managed Account (IMA) or Separately Managed Account (SMA), up from 17.8% in September 2014. Read more...

High cost, low balance SMSFs are in ‘transition’ period: report finds

High relative operating costs experienced by SMSFs with small balances is indicative of a transition period, and not an ongoing situation, according to the June 2016 Class SMSF Benchmark Report.

“Recent industry commentary has suggested that self managed super funds with smaller balances are not cost effective, citing that based on ATO data, funds with balances of $50,000 or less have lost 15 per cent over 7 years to June 2014,” said the report.

According to the ATO’s Self-managed superannuation funds: A statistical overview 2013-2014, the most recent report available, the average operating expense ratio in 2013/14 for SMSFs in the $1 – $50,000 range was 12.05%. Read more...