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SMSF Association hits out at PC’s evidence
The SMSF Association has slammed the Productivity Commission’s (PC’s) findings on the cost effectiveness of self-managed super funds (SMSFs) as based on “fundamentally flawed” evidence and claimed it does not consider individuals’ broader motivations in setting up the structures.
The Association said that factors such as data problems, investment return calculation methodology and the retirement demographics of SMSFs compared with Australian Prudential Regulation Authority (APRA) regulated funds made the PC’s assertion that SMSFs under $1 million weren’t cost effective “unreasonable”.
“The commission acknowledges in the draft report that there are issues with comparing APRA-regulated funds and SMSFs, and our analysis of the data issues leads us to the conclusion that it should reassess its draft findings that SMSFs with balances under $1 million are not cost-effective and underperform,” SMSF Association acting chief executive, Jordan George, said.
George also said the PC should consider factors such as transparency, engagement, tax planning and flexibility when looking at the cost-effectiveness debate, as the varied motivations of SMSF members go beyond just net returns and costs.
The Association strongly opposed an establishment limit, saying that it “paternalistically implied that only the wealthy know how to and are able to invest responsibly”.
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