Hot Issues
spacer
Vaccination rates as they happen around the world
spacer
Approaching the dawn
spacer
Videos and other resources for our clients
spacer
Retirement the ‘number one trigger’ for financial advice
spacer
‘Unfinished superannuation business’ to watch for in 2021
spacer
Superannuation ideas for 2021
spacer
Retirees need new super investment approach
spacer
Returning expats reminded on tax snares with pensions, investments
spacer
2020 is coming to an end. Phew!!
spacer
ATO flags key deadlines for early release of super
spacer
Retirement costs rising despite COVID impacts
spacer
Government targets fund expenditure, best interests in new super reforms
spacer
Small SMSFs develop rapidly
spacer
Investing basics for first timers
spacer
Behind the dash in new market listings
spacer
Super, death, and taxes
spacer
What millennials are thinking about investing and retirement
spacer
Capital preservation front of mind for SMSF returns
spacer
Comprehensive list of COVID-19 initiatives and packages.
spacer
Most SMSFs are still poorly diversified
spacer
Related party purchases must be clean
spacer
How your coming tax cut could pay off
spacer
Majority of retirees expected to fall short on retirement savings
spacer
Monitoring super performance critical in light of new measures
spacer
Budget 2020 - A very comprehensive break down.
spacer
Budget 2020 - Fact Sheets
spacer
Budget 2020 - At a Glance, Overview, Outlook
spacer
JobKeeper extension – changes implemented
spacer
Temporary home office expenses shortcut extended again
Small SMSFs develop rapidly

 

The latest industry research has shown SMSFs with low balances grow to levels allowing them to become cost-efficient very quickly.

 

       

A significant number of SMSFs considered uncompetitive on a cost basis typically with balances below $200,000 have historically grown to exceed this efficiency threshold in a very short period of time, new industry research has shown.

A Rice Warner study commissioned by the SMSF Association and supported by SuperConcepts found this to be the case when analysing 6000 funds with holding assets of between $100,000 and $200,000 in value at the beginning of 2017.

Rice Warner found by the end of 2017 its sample size had grown to 8000 funds, however, over the 12 months around 2000 had already grown beyond an asset balance of $200,000.

At the conclusion of 2018, the analysis showed around 3000 funds had exceeded the $200,000 cost-competitive threshold, with around 400 in the cohort closed down.

Further, at the end of 2019, just over 3000 funds had balances greater than $200,000 and 1500 funds in the group had been wound up.

“What you see with this over the three years is there’s only a minority of the funds that stay in the range. The biggest single group are the ones that move above the range and there’s a smaller proportion, but still a material proportion, that are actually closed,” Rice Warner senior consultant Alun Stevens observed during an online presentation of the research today.

“If you look at the smaller ones [with balances of] $50,000 to $100,000, the number that close actually rises.

“So what we can see across these ranges quite clearly was the smaller funds were either there because they were in the early phase of their life and they grew quite rapidly … or they are funds that are at the end of their practical life and you see a lot of them get closed.”

As such, there are many SMSFs with small balances remaining in existence for a long time, Stevens noted.

The study into the sector showed SMSFs with asset balances of $200,000 or more are cost-competitive with public offer funds and can be the cheapest retirement saving vehicle when the fund asset pool is in excess of $500,000.

 

 

Darin Tyson-Chan
November 23, 2020
smsmagazine.com.au

 

Pattinson Financial Services Pty Ltd ABN 17 121 851 376 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd
ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

Tel: +61 2 8850 6888 | Fax: +61 2 8850 6407 | Toll Free 1300 466 637 | PO Box 6253 Baulkham Hills BC NSW 2153

site By PlannerWeb