New SMSFs favour fewer members

New SMSFs members

Current statistics have revealed funds servicing fewer members have the most appeal for individuals looking to establish an SMSF.

An assessment of current superannuation data performed by SuperConcepts has shown a noticeable preference that has emerged among SMSF establishments to have the fund service a smaller number of members.

Speaking at the Accounting Business Expo 2023 in Melbourne last week, SuperConcepts SMSF support executive manager Nicholas Ali told delegates: “We haven’t seen much uptake or interest in six-member funds. So [the records show] four or more members [only account for] 3 per cent of our client base. The vast majority are two-member funds.

“But a trend that we are seeing is [a rise in the number of] single-member funds.

“A lot of people who are setting up self-managed superannuation funds are single members.”

According to Ali, situations where one member of a two-member fund passes away leaving the SMSF to continue as a single-member fund is contributing to the shift, but not in a significant manner.

“What we see generally is [where] there is one surviving spouse [from a two-member SMSF] they tend to rotate into an industry fund rather than maintain their self-manage super fund,” he said.

Subsequently he provided an insight into where the rise in single-member SMSFs is coming from.

“Most of those single-member funds are [being generated] by younger people setting up self-managed super funds and they are the sole member [of the SMSF] and sole director of the corporate trustee,” he noted.

With regard to the size of SMSFs, he confirmed there was a noticeable pattern as well.

“Larger SMSFs are proliferating and that’s where we see the growth in the size market is at the bigger end of the SMSF [sector],” he said.

He pointed out the ATO statistics reflecting individual member balances supported this observation.

“If you look at the data, there is 1 per cent of SMSFs with over $5 million of assets, 5 per cent with assets between $2 million and $5 million, and 13 per cent with assets between $1 million and $2 million, so that makes up 19 per cent [of the assets held in the sector],” he noted.

“That number has increased by 33 per cent over the last five years so again we’re seeing much larger funds and much larger member balances in the self-managed superannuation fund system.”

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