ATO statistics reveal a resilient SMSF sector

Despite the lingering possibility of the proposed new Division 296 tax being introduced, recently released ATO statistics point toward a resilient and mature SMSF sector – which continues to grow and evolve.

According to the ATO’s SMSF statistical overview 2022-23, at 30 June 2024 there were over 625,000 SMSFs, a 4.5% increase from 30 June 2023 – with 32,700 SMSFs entering the sector over the year, a 21% increase from 2022-23.

In fact, in the five years to 30 June 2024:

• the number of SMSFs increased by 11%, an average of 2.2% per year, and
• on average 27,000 funds entered the sector annually, and over 2,000 per month.

SMSFs, which now comprise over 1.15 million members, collectively held $990.4 billion (25%) of the $3.9 trillion in super assets under management – an increase of $69.2 billion, or 7.5% from 30 June 2023.

And of those 1.15 million members, most of them are committed for the long haul.

At 30 June 2024, more than 65% of SMSFs had been established for more than 10 years, and almost 80% of SMSFs having been established for more than 5 years – with an average SMSF age of 13.5 years.

Of the SMSFs that exited in 2022-23, the average period from entry to exit was 15 years – ensuring those members got to experience their fair share of legislative change during this time. And with younger members now opting for SMSFs as their preferred retirement savings vehicle, we expect this long-term trend to continue growing.

Given the maturing nature of many of these funds these statistics also show an uptick in funds entering into ‘retirement phase’, i.e. a fund where at least one member has received a benefit payment.

While the number of SMSFs entering the ‘retirement phase’ had hovered around the 42% since 2018-19, in the 2022-23 financial year almost 45% of SMSFs had at least one member who had received a benefit payment.

Of the SMSFs that started to make benefit payments, 80% were more than five years old, while only 11.3% were two years old or less.

As the average age of SMSF members at 30 June 2024 was 62.1, we can only expect the number of funds entering ‘retirement phase’ will continue to grow.

This highlights the importance of, and growing need for, personalised retirement planning for members approaching retirement.

It also emphasises the importance of the SMSF Associations ongoing advocacy efforts on key policy matters – such as the recently introduced legacy pension amnesty and ongoing consultations following the ATO’s release of Taxation Ruling (TR) 2013/5 Income tax: when a superannuation income stream commences and ceases.

Despite the potential headwinds, the SMSF sector looks set to continue on its growth trajectory with evolving member needs.

Personal note: For those attending the SMSF Association National Conference in Melbourne later this month, I’m looking forward to discussing some of these issues during my presentation titled Retirement Redefined: The superannuation perspective.