Industry Super Australia has “deliberately misled” the Financial System Inquiry (FSI) about SMSF investment diversification and is hiding its commercial concerns “behind the veil of protecting its members”, according to Taxpayers Australia.
As reported in SMSF Adviser, ISA stated in its submission to the FSI that data indicates most SMSFs are poorly diversified, with approximately two thirds having an “overwhelming” majority of assets in either high-risk assets or low-risk assets.
Taxpayers Australia has since said ISA is “attacking” SMSFs because it is concerned about leakage from industry funds to the SMSF sector.
“The ISA makes out the fact that some SMSFs are largely invested in safe investments as a bad thing, as if all superannuation funds must have the same investment strategy,” said Reece Agland, superannuation products and services manager at Taxpayers Australia.
“If you are in retirement phase or near retirement phase, as many SMSF members are, it makes sense to invest in low-risk investments. This is the optimal investment strategy to protect your income. This is a good thing, not a bad thing,” he said.
Taxpayers Australia also stated ISA fails to mention their funds also now allow people more choice in their investment options, and include both high-risk, high-return options and low-risk, low-return options.
“It is hypocritical of the ISA to complain that SMSFs can invest in either high-risk or low-risk investments when their member funds allow the same risk taking within an industry fund,” Mr Agland said.
“Should industry funds be banned from making such options if they are such a risk? Of course not. The investment strategy needs to better match the needs of each individual member and this can best be done in a SMSF,” he added.
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