SMSFs attract lower-income women

SMSF growth lower income women

The SMSF sector has continued to grow as women with lower balances outpace men in the area of new fund establishments.

The SMSF sector has continued to grow at a steady pace with an almost equal amount of male and female members, but more women with incomes up to $100,000 set up new funds in the June quarter, according to statistics released by the ATO.

The SMSF quarterly fund statistics for June 2023 showed there were 6351 new funds established for the quarter and 297 wind-ups for a total growth figure of 6054 funds, with the total number of SMSFs now at 610,287 holding 1.13 million members.

The ATO figures noted 52.9 per cent of members are men and 47.1 per cent are women and while the gender split is generally equal across all age ranges, female members lead their male counterparts in the area of taxable income under $100,000 at time of establishment.

According to the regulator, 10.7 per cent of female members at establishment in the June quarter had an income of up to $20,000 compared to 5 per cent of males, and the figures continue to double for the next income bracket of $20,000 to $40,000, which was earned by 12.9 per cent of new female members compared to 6.3 per cent of male members.

The pattern continued for those earning $40,000 to $60,000, which was earned by 15.4 per cent of female members compared to 8.8 per cent of male members, but started to flatten in the $60,000 to $80,000 income bracket, which was earned by 13.5 per cent of female members compared to 10.6 per cent of male members.

At $80,000 to $100,000, new female members were on par with male members, with 11.9 per cent of women in that bracket compared to 11.6 per cent of men. Beyond this point, 53.6 per cent of men earned from $100,000 to $500,000 compared to 32.3 per cent of women.

The ATO figures follow recent findings by Class that the gender gap in the SMSF sector was closing in comparison to Australian Prudential Regulation Authority (APRA)-regulated funds.

The “Class Annual Benchmark Report” found between financial year 2017 and 2022, APRA-regulated funds recorded a 1.5 percentage point increase in the gap, but during the same period, SMSFs on Class closed the gap by 4.4 percentage points, while the ATO figures showed a decrease of 2.23 percentage points.

Class stated this meant female balances in SMSFs were 84.9 per cent of male balances, up from 79 per cent in 2016, compared to a 20.6 per cent difference for APRA-regulated funds.

The report added that contribution splitting, recontributions and catch-up concessional contributions available to SMSFs were likely to help close the gap, particularly where members had balances above the general transfer balance cap of $1.9 million.

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