SMSFs appealing to younger members

The average one-member self-managed superannuation fund (SMSF) has a starting balance of around $225,000, in line with traditional wisdom that a quarter of a million is needed to set up an adequate SMSF.

The age of new SMSF members was also decreasing, research from Class found, with average age at establishment of 48.9 years old coming in below the 2012 average of approximately 50.

“One factor that may see this trend continue is the proposal to increase the Superannuation Guarantee from its current rate of 9.5% by half a percentage point from July 2021, until it hits 12% in 2025,” Class said. “This will enable the younger workforce to accumulate greater super balances at a younger age over time.”

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The average age at establishment was slightly different between male and female SMSF members of one year, with starting balances of men being 42 per cent higher. This gap narrowed with time however, as the average gap between men and women’s balances for 21 per cent in favour of the former.

The research also showed that the over 72 per cent of SMSFs were established as two-member funds, which Class said showed the importance of considering overall fund balance when determining the viability of setting up an SMSF.

The average fund balance on establishment was $406,000, with two-member funds having a shade above that, three-member funds clocking initial balances over $500,000, and four-member funds coming in at half a million.

The research was based on data from 26,1000 SMSFs comprising of 46,943 that were established from 2014 – 2018.

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