Retirement
Setting up an SMSF is too easy: REI Super
There are too many low-balance SMSFs losing out on fees, a super fund has said, calling for higher barriers to entry for SMSF trustees.
Setting up an SMSF is too easy: REI Super
There are too many low-balance SMSFs losing out on fees, a super fund has said, calling for higher barriers to entry for SMSF trustees.
Pointing to the Productivity Commission’s recent findings that low-balance SMSFs perform “significantly worse” than APRA-regulated super funds, the real estate industry super fund, REI Super, said it’s too easy for Australians to set up SMSFs and naïve investors are paying the price.
REI Super CEO Mal Smith noted that one in five SMSFs have balances of $200,000 or less, and said this ATO figure represents a “significant proportion” of the industry subjected to “considerable risk”.
Coupled with the Productivity Commission’s findings that smaller SMSFs tend to deliver “materially lower returns” due to higher costs, he argued that SMSFs aren’t worth an investor’s time unless they have at least $2 million in their balance.
Mr Smith said he’s seen instances of REI Super members leaving to set up an SMSF before returning after being stung by low returns and “hidden fees”.
“One member with an account balance of $100,000 was advised to go into an SMSF by her accountant,” he said.
“Another member was given bad advice and set up an SMSF with her husband with a combined account balance of $300,000.”
Data shared by the Australian Securities and Investments Commission (ASIC) with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry revealed that nine in 10 SMSF professionals failed to meet best interest requirements. This meant clients “risked being significantly worse off”.
Deputy chair Peter Kell noted that clients could be compromised by this, and acknowledged that one-size-fits-all advice poses an issue.
Mr Smith said returned members cited the difficulty, the time consumption and required expertise as key triggers to ditch their SMSF set-up.
He concluded, “Changes to SMSF rules would help prevent financial advisers from encouraging people into an SMSF when it is not in their best interest.”
RELATED ARTICLES
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Rest welcomes progress on ‘Payday Super’ reform
Rest, one of Australia’s largest profit-to-member superannuation funds, has welcomed the Australian Government’s release of draft ‘Payday Super’ legislation, which aims to align Superannuation ...Read more
Superannuation
SuperAPI and Humanforce partner to improve superannuation compliance for one million Australians
Superannuation engagement platform SuperAPI has partnered with human capital management provider Humanforce to streamline payroll and superannuation contributions for more than one million Australian ...Read more
Superannuation
Rest super fund reports 11.19 per cent return for 2024
Rest superannuation fund delivered an 11.19 per cent return in its MySuper Growth investment option for calendar year 2024, marking two consecutive years of positive returns. Read more
Superannuation
Actuaries propose three-tier superannuation tax reform
The Actuaries Institute has outlined major reforms to Australia's $4.1 trillion superannuation system, proposing uniform tax rates and new levies on high retirement withdrawals. Read more
Superannuation
Survey reveals Australians' reliance on superannuation for retirement
A new survey by AustralianSuper has found that only 32% of Australians believe they could save for retirement without compulsory superannuation. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Rest welcomes progress on ‘Payday Super’ reform
Rest, one of Australia’s largest profit-to-member superannuation funds, has welcomed the Australian Government’s release of draft ‘Payday Super’ legislation, which aims to align Superannuation ...Read more
Superannuation
SuperAPI and Humanforce partner to improve superannuation compliance for one million Australians
Superannuation engagement platform SuperAPI has partnered with human capital management provider Humanforce to streamline payroll and superannuation contributions for more than one million Australian ...Read more
Superannuation
Rest super fund reports 11.19 per cent return for 2024
Rest superannuation fund delivered an 11.19 per cent return in its MySuper Growth investment option for calendar year 2024, marking two consecutive years of positive returns. Read more
Superannuation
Actuaries propose three-tier superannuation tax reform
The Actuaries Institute has outlined major reforms to Australia's $4.1 trillion superannuation system, proposing uniform tax rates and new levies on high retirement withdrawals. Read more
Superannuation
Survey reveals Australians' reliance on superannuation for retirement
A new survey by AustralianSuper has found that only 32% of Australians believe they could save for retirement without compulsory superannuation. Read more
