A self managed superannuation fund (SMSF) is a superannuation fund with fewer than five members and...
The governments review into Australia’s superannuation regime, nicknamed ‘The Cooper Review’ revealed some interesting statistics about members of self managed superannuation funds or ‘DIY’ funds.
According to the report, Australians between the ages of 35 and 60 are at their ‘peak’ earning capacity, yet only a small percentage of those who have set up their own super funds are under 50.
A similar report suggested that more than half the $408 million-plus in self managed superannuation funds, is held by retirees.
The report suggested that 67% of members of self managed superannuation funds are aged over 50 and just 5.5% are 35 and younger, despite this age group making up 43% of the entire superannuation market.
However, this figure is believed to be on the increase, as young Australians are seeking to invest in their own self managed superannuation funds and take advantage of the benefits of self managed super. Benefits including, greater control over investment decisions, generally lower fees than investing in an industry fund and enhanced estate planning.
According to statistics, in the June 2009 quarter 6,188 new self managed superannuation funds were established and 11.6% of members in these funds were under 35, while 7.5% were aged 65 and older.
Australian’s aged 55 and over are understandably more inclined to establish their own super fund as for them, retirement is approaching and the desire to maximise their savings intensifies. Younger Australian’s however, can maximise the benefits of self managed superannuation by setting up a fund at a younger age.
Anyone over the age of 18 and who is eligible to become a member of a self managed superannuation fund i.e. not a disqualified person under the legislation, is eligible to set up a self managed fund.
The benefits of self managed funds including having flexibility and control over investment choice, has meant that as at 30 June 2010, of the $1.23 trillion invested in superannuation, $390.8 Billion was invested in self managed superannuation funds resulting in SMSFs having the largest representation in the industry.
Statistics show that most self managed funds are run by married couples who are the only members of the fund. Stuart Forsyth, assistant commissioner for Superannuation, has suggested that Australia’s aging population and the impact of death and dementia on older Australians poses a ‘significant risk’ to self managed super funds as members become unable to manage their funds. Key strategies to avoid this include allowing younger family members to enter the fund to assist in the funds management.
Younger Australians can benefit from managing their superannuation through their own self managed superannuation fund or alternatively through becoming members of an existing self managed super fund. Self managed superannuation is becoming a concept that is being optimised by Australians of all ages, not just those who are approaching retirement.
We specialise in setting up and helping people with their self managed superannuation fund. In many cases, a self managed fund can be cheaper than an investment in a retail superannuation fund.
Call us now on 9411 5422 to get started.