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SMSFs dominating retirement incomes market

The latest industry research into retirement incomes has shown SMSFs hold more than double the funds under management (FUM) of any other sector in the industry.

The DEXX&R “Market Projections Report” as at 30 June 2014 revealed the total assets held in the retirement incomes market were $486 billion and SMSFs controlled 62 per cent or $302 billion of that fund pool.

Behind SMSFs, retail allocated pensions had the next largest FUM, controlling $144 billion, which represented a 30 per cent market share.

The study indicated industry fund pensions held $28 billion of the total FUM in the market, representing only a 6 per cent slice, while annuities had $10 billion in retirement incomes FUM, which represented a 2 per cent market share.

The researcher predicted the retirement incomes market would grow to $948 billion in FUM by June 2024, with SMSFs still being the dominant sector holding $477 billion or 50 per cent of the market, followed by a holding of $330 billion or 35 per cent in retail allocated pensions, $120 billion or 13 per cent in industry fund pensions, and $20 billion or 2 per cent in annuities.

Despite this domination of the retirement incomes segment, the report revealed SMSF benefit payment outflows exceeded contribution inflows for the first time in the year ending 30 June 2013.

Specifically, SMSFs recorded outflows of $26 billion, with offsetting inflows of $24 billion.

Furthermore, the research showed SMSF contributions had grown by 8 per cent on an annualised basis from June 2004 to June 2013, while benefit payments from SMSFs increased by 24 per cent a year over the same time period.

The data led DEXX&R to conclude: “This differential between inflows and outflows is expected to continue at current levels, with the growth of total FUM held in both the accumulation phase and pension phase projected to increase from $557 billion at June 2014 to $865 billion by June 2024.”

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