Young trustees a positive sign for SMSFs, says SPAA
The growing number of young people setting up SMSFs is a positive sign for the sector and reflects the growing attractiveness of SMSFs, according to the SMSF Professionals' Association of Australia (SPAA).
Speaking to SMSF Adviser, SPAA senior manager of technical and policy Jordan George said the ATO statistics show SMSFs are attracting younger people, particularly those among the 35 to 44 age group.
“I think it bodes well for the sector that it remains attractive for individuals to enter an SMSF to gain control of their retirement savings,” said Mr George.
He said it was a trend he expected to see continue in 2015.
“SPAA research has shown there are strong intentions in the market to continue establishing SMSFs,” he said.
“The thing we need to be wary of though is that reviews such as the Financial System Inquiry can create a bit of uncertainty in people’s minds – they may hold back a little to see what’s happening in the sector before they go ahead and establish an SMSF.”
Mr George believes SMSFs featured very little in the FSI, and said it is unlikely the report will have any significant impact on SMSFs in 2015.
“I think the one recommendation in the FSI Report that could affect people’s intentions to want to set up an SMSF is the recommendation on banning borrowing,” he said.
However, Tim Mackay from Quantum Financial told SMSF Adviser the higher rates of younger people looking to set up SMSFs may not be a positive thing for the industry given there is often no economic benefit for them to establish one.
Mr Mackay said younger people tend to have lower balances and would therefore be better off looking at other types of super funds.
“Unless you’ve got a couple of hundred thousand dollars in superannuation, in the vast majority of cases there’s nothing wrong with an industry fund or a retail fund,” he said.
“I just can’t see a clear and compelling case for younger Australians with lower super balances to set up SMSFs when there are cheaper alternatives that give them just as much investing exposure outside an SMSF.”