Non-standard costs distorting ASIC SMSF figures
An analysis of ASIC’s recently released fact sheet for new SMSF trustees by software provider BGL has uncovered that the average annual fees of $13,900 quoted by the corporate regulator were distorted by one-off costs included in its calculations.
The costs quoted by ASIC in its fact sheet “Self-managed superannuation funds: Are they for you?”, which was distributed to all new trustees in a pilot program in November last year, have been widely decried by industry stakeholders, who said the average running costs are closer to a range of between $1,500 and $5,000 per year.
In analysing data obtained from the corporate regulator that was used in its calculations when coming to the $13,900 figure, BGL uncovered that just 8.7 per cent of the costs quoted came from administration, while the remainder were mostly attributable to other expenses such as insurance that were not common among most SMSFs.
“We are not disputing the data itself, we just think the way the data has been presented is misleading,” BGL managing director Ron Lesh said.
“Our analysis has ascertained that ASIC’s calculation of the average cost of running an SMSF includes Australian and overseas interest, insurance premiums, forestry managed scheme expenses, investment expenses and something called ‘Other Amounts’. These expenses only apply to a very small number of SMSFs.
“These amounts contribute to 91.3 per cent of the SMSF costs. The average administration cost, after the removal of all these items, becomes just $1,205. Even if investment expenses are included, the average amount becomes $3,348. This is a far cry from ASIC’s headline amount of $13 886.”
Mr Lesh said the software provider had used ASIC’s cost model to calculate average annual running costs across its SMSF clients and had come up with a significantly lower figure, and this was lower still when a median figure was used, indicating large balance funds may distort the data.
“BGL has done an extensive analysis of the 190,000-plus funds on the Simple Fund 360 platform. We have done this calculation exactly the same way ASIC did their calculations. Our calculation shows an average cost of $5,720, and when you take the median cost rather than an average cost of running an SMSF, it is $3,718,” he said.
“BGL has no problem with ASIC and the ATO releasing data, but we think that data needs to be properly explained and needs to represent the real costs in the industry. It would appear whoever wrote the ASIC flyer has an anti-SMSF agenda and created the flyer to be misleading, and for new SMSF trustees, simply scary.”
