The number of SMSFs established during the 2024 financial year is expected to reach the highest level of new funds in years, with trustees bringing in larger superannuation balances, according to research released by Class.
“The ATO has indicated the June 2024 SMSF stats will be released shortly and we’re expecting establishments will exceed 30,000 funds for 2024. That would be the first time we’ve reached that number since the 2017 financial year, before the introduction of super reform and the transfer balance cap,” Class chief executive Tim Steele said at Class Ignite 2024 in Sydney last week.
“The average balance of newly established SMSFs on Class has increased by 9.2 per cent over the year and for the first time has exceeded half-a-million dollars at $537,000 for the 2024 financial year.”
According to the Class “2024 Annual Benchmark Report” released last week, younger members were responsible for driving growth in the sector.
“Based on our data, we have gen X continuing to drive establishments with just under 53 per cent of all new SMSFs and millennials just under 28 per cent. That combination is up slightly at 80.6 per cent from 76.4 per cent the year before,” Steele noted.
He pointed out the importance of considering the number of new funds in the context of those being wound up during the same period. Historically, ATO data shows SMSF wind-ups tend to peak in June, with non-compliance being the most commonly cited reason for closures, followed by concerns over investment returns.
While the latest ATO data indicated the lowest number of fund wind-ups in a March quarter since 2018, the report suggested fund closures may rise, largely due to late lodgements of SMSF annual returns.
During a panel discussion, Accurium principal Melanie Dunn speculated the reduction in wind-ups might be linked to stronger education and enforcement efforts by the ATO.
“Could it be a function of the SMSF sector and the work that regulators have done to make sure people are starting SMSFs for the right reasons? Some of that work is starting to come through and people are making sure they understand the responsibilities of having an SMSF,” Dunn said.
SMSF chief executive Peter Burgess agreed, stating: “I would like to think that is the case, that we’ve got the right people setting up self-managed super funds, and for that reason we’re seeing less wind-ups than we were in the past … which is what we want.”
