SMSF trustees are transitioning into retirement earlier with larger member balances than their counterparts in retail funds, according to new research released by Class.
In its “2024 Annual Benchmark Report” released last week, Class found its SMSF members aged from 60 to 64 were 2.7 times more likely to use a transition-to-retirement income stream (TRIS) or retirement-phase income stream than members of APRA (Australian Prudential Regulation Authority)-funds in the 2023 financial year.
Commenting on the findings, Class chief executive Tim Steele noted SMSFs continue to lead as the vehicle for members moving into retirement with confidence, after releasing data in its 2023 edition of the report confirming just 12.2 per cent of its SMSF members aged 65 and over remained in accumulation phase.
“Nearly 93 per cent of Class SMSF members over the age of 65 have established a pension and that compares to 49 per cent of APRA fund members,” Steele said at Class Ignite 2024 in Sydney last week.
“Our data shows, especially for those aged 60 to 64, they’re increasingly looking to utilise transition-to-retirement income streams and retirement-phase income streams, indicating they’re taking a more proactive and positive approach to their retirement planning.”
Additionally, the report findings noted just over one-quarter of Class SMSF members (26 per cent) aged between 60 and 64 transitioned their balance into tax-free retirement-phase income streams, compared to just 8.2 per cent of APRA fund members.
“This trend suggests that SMSF members are more aware of the tax advantages of income streams and are more likely to adopt or maintain an income stream strategy, both pre and post retirement,” it stated.
SMSF members are also entering retirement with larger member balances, with the average balance of Class members using a TRIS significantly higher at $581,817 when compared to those in APRA funds at $208,798.
The report includes data sourced from SMSFs on the Class platform, the ATO, APRA and contributions from industry experts.
