The SMSF Association has welcomed the findings of the 2021 Intergenerational Report, acknowledging the conclusions reached indicate a positive future for the sector.
The latest Intergenerational Report predicted the decades ahead will see an increasing number of Australians being able to fund their own retirement and the industry body has identified this as a good finding for the sector because many of these individuals will choose an SMSF as their preferred retirement savings vehicle.
To this end, SMSF Association public policy committee chair Deborah Ralston noted: “Reliance on the age pension will reduce as super balances grow, and at 2.4 per cent of GDP (gross domestic product), Australia has one of the lowest-cost pension systems in the OECD (Organization for Economic Co-operation and Development).”
The association also claimed the superannuation projections contained in the report would further strengthen the sector. To this end, Treasury forecast the median superannuation balance at retirement will increase from around $125,000 in 2020/21 to about $460,000 in 2060/61.
Given research from Rice Warner commissioned by the SMSF Association in conjunction with SuperConcepts released late last year found SMSFs with balances of $200,000 or above are cost-competitive with Australian Prudential Regulation Authority-regulated funds, the industry body stated its belief this data means the people who find running their own super fund will be a cost-effective option for them is set to grow.
According to SMSF Association chief executive John Maroney, the report also highlighted how complex the interaction of the age pension, taxation, superannuation and aged-care systems in this country is, leading him to conclude affordable and accessible financial advice will be key in allowing Australians to navigate this situation.
“One of the short-term reforms that will help boost productivity and help encourage additional savings is to ensure that all Australians have access to high-quality financial advice. This will help us meet many of the challenges illustrated in the Intergenerational Report,” Maroney said.
