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SMSFs to continue post-retirement domination

The latest study into the future of the Australian superannuation landscape has predicted SMSFs will continue to be the dominant retirement savings vehicle for individuals in their retirement years.

The Deloitte “Dynamics of the Australian Superannuation System: the Next 20 Years” report concluded SMSFs would be managing a total of $900 billion assets in 2035 and would be the largest post-retirement super sector in two decades’ time.

“SMSFs are popular, although less so in the pre-retirement phase than post-retirement, where they dominate,” Deloitte actuaries and consultants partner Ben Facer said.

“People are tending to create their own SMSF on retirement or earlier, particularly if leaving employment with a large benefit entitlement from their existing superannuation fund (such as a current corporate or public sector plan).

“The sense that SMSFs offer greater control over superannuation returns and, for those members with larger account balances, the ability to harness the flexibility of family-based accounts are attractive incentives.

“This suggests that with the tax benefits available within an SMSF structure for those transitioning from pre-retirement to post-retirement, post-retirement SMSF assets will continue to grow.”

Deloitte said it expected the post-retirement market to reach $1.5 trillion in assets under management by 2035.

Despite the popularity of SMSFs among individuals in the retirement phase of their lives, the study predicted industry and retail superannuation funds would grow at a faster rate than their SMSF counterparts.

“The total retail fund sector (a combination of retail employer sponsored and retail personal) will take over from SMSFs as the largest market segment in 2028 and reach $3 trillion in assets in 2034,” the report said.

In regard to the overall superannuation sector, Deloitte’s analysis forecast the pool of Australian retirement savings assets to reach $4 trillion over the next decade and $9.5 trillion by 2035.

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