Last year was an eventful and challenging one for SMSFs. With the gaze of the regulators firmly affixed on trustees and practitioners, barely a week went by when the sector wasn’t making headlines.
However, at times, speculation and criticism seemed to shroud the industry, overshadowing its growth and progress. The year 2013 was a successful one for the SMSF sector, in spite of the relentless scrutiny.
For one, SMSFs continued their dominance within the broader superannuation industry. The SMSF sector continues to represent the largest segment of Australia’s super industry, according to figures released by the Australian Prudential Regulation Authority (APRA).
The SMSF sector also continued to enjoy healthy and sustainable growth, despite suggestions that SMSF establishment and expansion is explosive and out of control. The number of SMSFs increased by 7 per cent, totalling 509,362 at June 2013, APRA stated.
“Talking about SMSFs as if the number of people starting them has suddenly and unexpectedly exploded runs the risk of creating the misleading impression that they are simply the latest flavour of the month and will soon fade into obscurity,” said David Barrett, principal consultant at Bravura.
“Rather than a sudden and dramatic shake-up… data suggests that the Australian superannuation sector is going through a steady and fundamental shift. Australians are challenging the traditional model of fund manager-driven super funds and seeking an investor-driven investment structure,” he added.
The relatively clean compliance record of SMSF trustees also remained strong and steady. The Australian Taxation Office reported that 98 per cent of SMSFs were compliant in the 2012/2013 financial year, again confirming The Cooper Review’s view that the SMSF sector is largely successful and a well-functioning part of Australia’s super system.
Other positive developments included the evolving demographic profile of SMSF trustees, which is being increasingly shaped by engagement from women and younger generations of investors.
This paints a picture of a sector that is compliant, growing and progressive. Given the intense scrutiny by government and the regulators in 2013, these notable developments seem to have flown under the radar.
However, it’s not looking like practitioners or trustees will be let off the hook in 2014. In June last year, the ATO committed to increasing its audits of SMSF trustees, with a particular focus on tracking regulatory and income tax compliance.
Matthew Bambrick, ATO assistant commissioner, again stressed in November 2013 that the regulator’s focus on the SMSF sector is ongoing, because of serious concerns for trustees and professionals who fail to understand their personal and professional responsibilities and obligations.
So, despite remaining largely compliant, successful and sustainable, the SMSF sector may be headed for another year in the headlines. But there’s no reason why the sector can’t respond to the challenges and continue on its upwards trajectory, just as it did in 2013.
Yes the government should streamline the process for SMSF’s because we are doing their job of looking after the oldies ourselves. They should make it easier for funds in accumulation phase to add extra funds. Especially for those have already retired.