News & Commentary

Super curtain-raiser 16 Jun 10


The recent release of APRA’s March quarter superannuation statistics certainly provides a powerful curtain-raiser to the imminent unveiling of the final report from the Cooper superannuation review.

First, APRA’s super figures underline the absolute strength of the superannuation industry overall with its assets up by $31.8 billion in the quarter to reach $1.26 trillion.

Second, APRA’s figures highlight the continued impressive growth of SMSF assets – up $14 billion over the quarter to exceed $400 billion.

The 3.6% gowth in SMSF assets equalled the percentage growth of industry funds and was markedly ahead of retail funds (up 1.6%),public-sector funds (up 2.7%) nd corporate funds (up 1.7%).And SMSF growth was ahead of the total percentage growth in super assets of 2.6%. br />
Significantly, SMSFs have once again truly reinforced their position as the largest superannuation sector in dollar terms.

SMSFs were, of course, the subject of the Cooper review’s third and last tranche. And the review’s preliminary report on SMSFs, publicly released in late April, gives a good idea of where the review is heading in this regard.

Last week, chair of the review Jeremy Cooper gave a succinct insight into the review’s thinking about SMSFs when he said in an address to the Stockbrokers Association of Australia: “Overall, we found the SMSF sector to be in fairly good health. In this sector, members are older, wealthier and more likely to be in pension phase than average members in other sectors.

“They are people who are generally fairly comfortable making decisions about capital and seem to be doing a sound job.”

And now to the crunch of Cooper’s words: “Our main messages have been that SMSFs need to stay focused on retirement savings, rather than related-party transactions, collectables and leverage. Do that, and self-managed super funds start to look much more like the legitimate vehicles for retirement savings that they actually are.”

It would be well worth anyone who is contemplating the establishment of a SMSF or anyone already with one to read Cooper’s words closely.

Expect plenty of debate within the SMSF sector once the Cooper review and the Government’s response are publicly released.

Smart Investing last discussed the Cooper review and SMSFs on May 19.

 

* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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