Touted $1m SMSF cap dealt a blow with new survey
Less than one-fifth of SMSF professionals believe a starting balance of $400,000 or greater is necessary for the establishment of an SMSF, according to a recent BGL survey.
Earlier this year, the Productivity Commission said it was concerned about the high cost ratios for lower-balance SMSFs and suggested that SMSFs with less than $1 million were not competitive against retail super fund offerings.
This suggestion has already been met with substantial criticism by the SMSF Association and other prominent groups who’ve since highlighted issues with the comparability of data between public offer funds and SMSFs and the various reasons clients have for setting up SMSFs.
The BGL SMSF Insights Report, conducted by Bstar and commissioned by BGL, indicates that the over half of the professionals in the survey or 55 per cent, consider $200,000 to $400,000 to be an appropriate starting balance for an SMSF, in line with ASIC’s guidelines.
A quarter of respondents or 25 per cent consider between $100,000 to $200,000 to be an appropriate starting balance, while only 3 per cent would recommend establishing an SMSF to a client with a balance below $100,000.
Conversely, only 17 per cent believe a client should have $400,000 or more in order for an SMSF to be appropriate.
Only two respondents nominated $1 million as an effective balance minimum for the establishment of an SMSF, in line with the Productivity Commission’s views.