SMSF Association chair Dr Deborah Ralston has labelled the Productivity Commission’s (PC) findings into SMSFs as surprising, given it acknowledged the difficulties in comparing the performance of Australian Prudential Regulation Authority (APRA)-regulated super funds and SMSFs.
Addressing the SMSF Association Technical Day Series in Sydney today, Ralston said the Productivity Commission made some “courageous” statements on the minimum efficient size of SMSFs.
“Our response was thorough and included not only very detailed performance data from platform providers BGL and Class, but also the views of our practitioner members on the subject,” she said.
“The submission was compelling and well refuted the proposed $1 million threshold. We look forward to the PC’s response on this issue.”
The commission’s draft report into competition and efficiency in superannuation, released last month, said many smaller SMSFs with balances under $1 million have delivered significantly lower returns on average than larger SMSFs.
“The difference between returns from the smallest SMSFs (with less than $50,000) and the largest (with over $2 million) exceeds 10 percentage points a year,” the report said.
Class’s submission argued while the report provided well-researched findings on APRA funds, it failed to hit the mark on SMSF performance, highlighting this points to the inherent differences between how APRA and the ATO report fund performance.
Ralston also seized the opportunity to emphasise the importance of specialist SMSF education and professionalism in light of findings emerging from the banking royal commission and two Australian Securities and Investments Commission (ASIC) reports on SMSF advice.
“We affirm our commitment to bring you the most current and the highest-quality ongoing technical education, enshrining the specialist SMSF adviser and SMSF auditor designations as the pinnacle of professionalism,” she said.
ASIC also noted the need for greater financial literacy for SMSF trustees.
“With the increased complexity of SMSF regulation, trustees need to be better informed and indeed we’ve seen a real drive from trustees to connect with professionals in this area and to have a better understanding of their own responsibilities,” Ralston said.