The success of SMSFs relative to other superfunds will largely depend on regulations.
Melbourne, Australia (PRWEB) June 20, 2014
Self-Managed Superannuation Funds in Australia have taken off over the past five years. Industry assets are forecast to increase at an annualised 11.6% over the five years through 2013-14 to reach $611.1 billion, while industry revenue is forecast to grow at an annualised 38.2% over the same period to reach $112.8 billion. A large portion of industry revenue is attributed to inward transfers (i.e. rollovers), which are assets that have been transferred into SMSFs from other superfunds. As with any superannuation fund, SMSF revenue is highly volatile as a result of a large exposure to the local share market. As a result, 2013-14 revenue is expected to decline by 13.7%.
The rise of SMSFs can be attributed to numerous factors including a wider range of investment options, a favourable tax environment and the ability to have more control over one's retirement savings. Property investors have also started to use SMSFs to increase their exposure to residential real estate. As a result, the asset mix of SMSFs is more skewed towards property and is less diversified overall than the asset mix of traditional superfunds. Currently, the industry is only governed by the Australian Taxation Office. According to IBISWorld industry analyst Andrei Ivanov, “this has raised many concerns regarding the sustainability of the industry and its role in fuelling a potential housing price bubble.” Regulation in the industry is expected to increase over the next five years. The future for the industry remains bright. Industry assets are forecast to grow, as is industry revenue. “The success of SMSFs relative to other superfunds will largely depend on regulations,” says Ivanov. The release of the Murray Financial System Inquiry late in 2014 is expected to shed more light on potential regulatory changes.
The Self-Managed Superannuation Funds industry has a low level of market share concentration. The number of SMSFs operating in Australia is estimated at just under 559,000 in 2013-14. This number is primarily driven by regulation. Because there is only so much money an individual person can save in their superannuation balance, the assets of an SMSF will always be far smaller than assets of a traditional fund. The industry's market share concentration is expected to remain relatively steady over the five years through 2013-14 and will depend on regulation of the maximum allowed number of members in a self-managed superfund.
For more information, visit IBISWorld’s Self-Managed Superannuation Funds report in Australia industry page.
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IBISWorld Industry Report Key Topics
Businesses in this industry operate superannuation funds that are required to have no more than four members. Industry revenue is comprised of contributions, investment income and inward transfers. Investment income is derived from investments and capital gains or losses. Industry establishments represent the number of self-managed superfund members.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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