SMSF sector set for negative cash flow

Double-digit growth rates are unlikely to continue in the self-managed super fund (SMSF) sector, according to DEXX&R's latest projections report.

It projected negative cashflows would occur for the first time during calendar 2012.

SMSF benefit payments are expected to increase to $63 billion by December 2015, $20 million more than contributions which are estimated will be $40.5 billion at that time, the report said.

DEXX&R said the prediction aligned with the older age profile of SMSF members and an increasing number of SMSFs moving into the retirement income drawdown phase.

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It projected the total superannuation market would increase by an average annual growth rate of 7.7 per cent per annum to $3,171 billion at December 2012.

The growth phase in equity values would encourage money sitting in cash and term deposits and bonds to move back into equities, reversing the post-GFC trend of holding cash, including for SMSFs, DEXX&R said.

The retirement incomes market would grow at 9.6 per cent per annum to $320 billion as at December 2022, with allocated pensions representing 97 per cent of total funds under management and the remaining 3 per cent held in annuities.

Inflows into allocated pensions would also increase, due to the transfers of retiree accounts from SMSFs to allocated pensions in order to minimise administration costs.