SMSF Association Submission
The SMSF Association (SMSFA) welcomes the opportunity to make a submission to the Retirement Income Review.
The SMSF sector comprises over one quarter of the near $3 trillion superannuation assets. There are approximately 1.1 million Australians in 596,000 SMSFs with an average fund balance of $1.2 million and a median fund balance of $690,000 (the median value is a more useful measure as a minority of very large SMSFs distort the average figure).
SMSFs are typically made up of a couple with an average of 1.9 people in an SMSF and 42% of SMSFs are in some form of retirement phase. With such a high percentage of SMSFs in the retirement phase, they are a pioneer group for retirement and are responsible for a significant portion of total superannuation retirement income payments. This means they are an extremely integral component of the retirement income system.
We support the Review’s aim to identify relevant issues in the retirement income system, provide a better understanding of the nature and consequence of trade-offs and then develop a fact base for policy to be developed to meet evolving community standards and expectations.
We believe that a key focus of the Review should be the integration of the different elements of the retirement income system. Ensuring that all parts of the retirement income system are working together is essential to the system delivering a secure and dignified retirement to as many Australians as possible.
Highlights of the submission include:
- The SMSF sector has almost half the income benefit payments and voluntary contributions in the superannuation sector.
- Superannuation needs to be simplified.
- The retirement income system and superannuation needs a meaningful objective.
- Superannuation should not be subject to potential significant change every Budget cycle.
- Commentary on the changing Australian landscape affecting the retirement income system including such things as, longevity risk, asset allocation and spending in retirement, the integration between superannuation and the Age Pension and retirement advice.