SMSF trustees forced to invest outside super

Having largely escaped the wrath of the Cooper Inquiry, the SMSF market, led by its representative body, has started to flex its muscles with a call for higher caps on superannuation contributions.

The publication yesterday of new research from the Self-Managed Super Fund Professionals Association of Australia (SPAA) and Russell Investments included the estimate that the average SMSF trustee would invest a further $74,000 a year in super if the current caps were relaxed.

Andrea Slattery, SPAA chief executive, said the association wanted a return to pre-1999 contribution caps of $100,000 for over-50s and $50,000 for other contributors. As it is now, many people had to go outside the super system to reach their retirement savings goals.

The research, conducted by Brand Management, surveyed about 1,300 SMSF trustees, advisers and accountants with both a questionnaire and focus group conversations.

The SMSF market, with about 410,000 funds, is the largest segment of super in Australia. Apart from some tinkering to do with restrictions on the purchase of works of art, the inquiry by Jeremy Cooper has left the segment with little change to proposed regulations.

Large super funds, however, have been subject to several key new proposed requirements, the main one being the introduction of a new low-cost default option under MySuper.

The SPAA/Russell research showed that a comfortable majority of SMSF trustees – 79 per cent – were confident they were on track to achieve retirement goals, although they were forced to also invest outside of the super system.

The research also showed that SMSF trustees were likely to work longer than the average before retiring full-time, with SPAA suggesting a review around age limits.

It also showed that the trustees’ biggest challenge was staying on top of legislative changes. They also wanted less prohibitive and more flexible rules around gearing.