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Xpress Super against SMSF barriers to entry

SMSF administration service provider Xpress Super is the latest organisation to oppose the implementation of barriers for individuals wanting to establish an SMSF.

Commenting on Xpress Super’s submission to the Financial System Inquiry (FSI), Xpress Super and Super Guardian chief executive Olivia Long said: “We would urge the FSI not to impose a minimum of funds under management before people are allowed to establish a SMSF.”

Long cited the 2010 Cooper review, which previously looked at minimum balances and decided against setting a limit, something she hoped the FSI would also conclude.

“Since Cooper’s report there’s been no evidence that trustees are proving to be anything less than diligent managers of their superannuation, whether it’s judged in terms of compliance or investment returns, which strongly suggests the status quo should remain,” she said.

Although SMSF trustees with low balances were paying more than their Australian Prudential Regulation Authority (APRA)-regulated funds when it came to fees, “these people have decided that’s a price worth paying to be engaged with their superannuation”, she said.

“It will have long-term benefits in terms of these people being more likely to be self-sufficient in retirement as our evidence shows they quickly get their funds under management up to a limit where their fee structures are on a par or even cheaper than the APRA funds,” she said.

“In addition, there are flow-on benefits to all other areas of their financial lives – provided they are given all the facts when they set up a fund, their balance should not be a determining factor.”

She pointed to statistics from the Australian Taxation Office (ATO) that showed the average operating expense ratio for an SMSF fell over the four years to 2010/11 and remained stable in 2011/12.

This is in contrast to the average operating costs for APRA-regulated funds, which increased from 2010-12.

“The ATO found that ‘SMSFs are both flexible and resilient in their ability to concentrate or diversify asset portfolios with an ability to respond to changing economic circumstances’,” Long said.

This was also backed up by a recent Roy Morgan Research report, “Superannuation Satisfaction”, which showed people who used trustees were more engaged with their superannuation compared to those who held industry or retail funds, she said.

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