The report revealed that net SMSF establishments continued to grow in FY24, increasing over the year by 4.5 per cent to 625,609 funds as the declining trend in windups persisted.
The average age of Class SMSF members for all newly established funds was unchanged from the previous year at 49, while the average asset balance at establishment grew from $492,000 to $537,000 (+9.2 in FY24).
The report also found that the majority of newly established funds by Class SMSF members in FY24 (54.4 per cent) were established by those aged between 25 and 49.
Within this cohort, the 35 to 49 age group continues to account for the biggest share of establishments at 30.6 per cent, an indication that younger Australians are engaging more with their superannuation and being proactive about where it is invested by choosing to establish an SMSF.
Generation X (aged 43 to 57) continued to account for the majority of new fund establishments with 52.9 per cent, up from 51.4 per cent in FY23.
“As they are getting closer to retirement, Generation X are thinking more about retirement and how to maximise their superannuation, with SMSFs being a viable retirement savings option for many,” the report reads.
“With many young Australians finding property out of their reach, more are turning to SMSFs for financial control over their superannuation. Millennials now make up 27.7 per cent of new fund establishments as they focus more on their retirement savings.”
Tim Steele, CEO of Class, said SMSFs now account for just over 25 per cent or $990 billion of the $3.92 trillion superannuation industry.
“As of 30 June and across funds measured for our benchmark reporting, the total net value of assets on class was $320.5 billion and when we extrapolate that out for those clients who weren’t included in the benchmark report, it’s closer to $340 billion,” he said at the launch of the report on Wednesday.
“The average number of SMSFs per business has increased by just under two per cent and the class SMSF average balance is $1.8 million, up 6.2 per cent, while the member balance has risen 6.4 per cent to $955,000.”
Steele said that based on the Class data, Gen X is continuing to drive establishments accounting for just under 53 per cent of all SMSFs, with Millennials just under 28 per cent.
“That combination is up slightly to 80.6 per cent from 76.4 per cent the year before. While the latest data from the ATO from FY22 shows the average age of new establishments was 46 years, our data shows it is 49 years, unchanged from last year.”
He noted also that the average balance of newly established SMSFs increased by 9.2 per cent and for the first time exceeded half a million dollars at $537,000.
Meg Heffron, director of Heffron, said the rise in the number of SMSFs could be because people now have more money in their superannuation at an earlier stage of their working life.
“I think it’s not surprising that if you’ve got bigger assets in super, you’re more inclined to take charge, and SMSF is the obvious choice for somebody who wants to do that,” she said during a panel discussion at the launch.
“It’s not surprising that the growth has been driven by the Millennials and Gen X because if you look at that demographic, they’ve been in compulsory super for their entire working lives and these days their super is at very high levels.”
Peter Burgess, SMSF Association CEO, said the increase in establishments could also be a function of the SMSF sector and the work the ATO has done to make sure people are starting SMFSs for the right reason.
“Some of that work is starting to come through and people are making sure they understand the responsibilities of having an SMSF,” he said.
