ATO working on more meaningful performance data

ATO SMSF performance data

The ATO is working to improve the data SMSF trustees can use to compare their fund performance against that of large public offer superannuation funds.

The ATO is currently in the process of improving the data it publishes to provide SMSF trustees with better information to allow them to compare the performance of their funds against the large public offer superannuation funds.

“I’m actually undertaking a project at the moment that I’m trying to get APRA (Australian Prudential Regulation Authority) where we will review the methodologies [of the data we release] and try and align them so that there is some comparability because they actually take into account different things, which means they are not truly comparable,” ATO SMSF segment assistant commissioner Dana Fleming said at the recent SMSF Trustee Empowerment Day 2019, hosted by smstrusteenews.

According to Fleming, the project was initiated after the inability to compare the ATO and APRA data sets was highlighted by the Productivity Commission.

Even though she is driving the initiative, Fleming warned comparing SMSF performance with the APRA-regulated fund sector may well be a flawed process regardless of the strength of the data being used.

“I’m not sure that is the right comparison and the reason I say that is most APRA funds’ member demographics are significantly different to SMSF demographics,” she said.

“Most APRA-regulated funds have 80 per cent of members who are not in pension phase and 20 per cent in pension phase, whereas most SMSF members are older and in pension phase – nearly 50 per cent.”

To this point, she noted the investment decisions of a person who is in retirement phase versus those of a person who is 24 years old are very different, making a performance comparison of the two close to meaningless.

“I don’t think it’s a good comparison because I don’t think it’s apples with apples anyway. People make decisions in the context of their SMSF that are specific to their circumstances for what two people generate, whereas APRA-regulated funds make decisions that cover, in AustralianSuper’s case, 2 million people,” she said.

She said there was a set of more meaningful criteria SMSF trustees should use to monitor the performance of their funds.

“The right comparisons would be to look at your investment strategy and determine if you’re happy with what you’re doing in achieving the goals that you want for your retirement. That’s what I think is the right question to be asking,” she said.

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