Comparing super sectors serves no purpose
Australian Taxation Office (ATO) figures on investment performance and fees for self-managed superannuation funds (SMSFs) show it is pointless comparing them with other superannuation sectors, according to the SMSF Professionals' Association of Australia (SPAA).
Director, technical and professional standards at SPAA Graeme Colley said SPAA had always argued such comparisons served no purpose.
"The ATO specifically states that comparing the investment performance between SMSFs and other types of superannuation funds is fraught with danger. While methodologies may be comparable, the data collected from the different types of funds is not the same," he said.
"It's similar with fees. Comparing the operating expenses of SMSFs with other types of superannuation funds is difficult. While the ratios used in the ATO statistics may be comparable, the data collected from the different types of funds is not the same."
Colley argues that SMSFs are tightly regulated and the regulator scrutinises them closely since they are managed by individuals, whereas other funds have prudential systems in place.
Comparisons of SMSFs with other sectors is not a like-with-like comparison, he said.
SPAA recently said super funds should be guarded on their commentary on SMSFs after Media Super was fined $10,200 for misleading advertising using such a comparison.
He said people should get objective and impartial advice from experts on the superannuation industry.
The expense ratios of SMSFs are about 0.56 per cent in the 12 months to 30 June 2012, falling from 0.69 per cent to 0.56 per cent over the five years to 2012.
"This decrease reflects the increase in the asset sizes of SMSFs over the period as well as increased competition in the market for audit, accounting and administration services for SMSFs. Average operating expenses have increased over the same period and are estimated to be $5600.
"Due to the fixed costs of operating a fund, SMSFs with lower balances have higher average expense ratios — 9.5 per cent with SMSFs with a balance of $50,000 compared to less than 1 per cent for SMSFs with assets of more than $500,000."
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