Real estate super fund rallies for blocks on low-balance SMSFs
An APRA fund for the real estate industry, REI Super, is lobbying for stricter controls of SMSFs with low balances.
REI Super wants the federal government to make it harder for prospective trustees to set up an SMSF if they have a total super balance of less than $200,000.
The industry fund is basing its argument on the Productivity Commission’s draft report on superannuation, which has found that SMSFs with low account balances delivered worse returns than an APRA fund would.
“This is a significant proportion of the superannuation industry to be subject to such considerable risk,” said REI Super chief executive Mal Smith.
“The data is clear and shows that you need an average of $2 million in your SMSF until you start to match the returns of APRA-regulated funds.”
This long-trumpeted argument from the APRA-regulated fund sector is likely to be shut down by the SMSF sector on grounds of context.
Statistics and figures like those quoted do not take into account several factors, such as the purpose of a fund’s establishment and the pace of growth years on from establishment.
Recently, the SMSF Association’s head of policy, Jordan George, told SMSF Adviser there is “good evidence” that SMSFs can achieve scale, and strong returns, over time.
For example, in January this year, the ATO examined SMSFs that lodged their first return in 2012 and traced their performance up to 2016.
The tax office found that 51 per cent of a sample of 36,160 SMSFs reported total assets of $1 to $200,000 in 2012. Comparatively, this asset range made up only 20 per cent of funds still active in 2016.