Government policy driving SMSF growth
As the number one reason for self-managed super fund (SMSF) establishment, control is a well established catchphrase. Yet for Martin Heffron, managing director of Heffron SMSF Solutions, Australians' desire for control of their retirement income is due in large part to government policy.
"The way I look at why that desire for control has arisen is that we've gone from a situation back in the early 20th century when the age pension was initially introduced," he said.
"The average life expectancy of an Australian male at that time was 64, so the average bloke was probably going to be dead by the time they got access to their pension.
"But that life expectancy has increased by roughly 20 years in the last 100 [years] and governments' policy response to that in Australia, and in a lot of other jurisdictions, has been to try and transfer the retirement income funding risk from the state to the citizen."
Indeed for Heffron, it is not so strange for people to want to control what they have been given responsibility for.
"So as people become aware that they have responsibility for retirement income funding, that it's their gig and not anyone else's, then I think it's a natural human reaction to want control in order to guarantee your funding," he said.
"And so I see that as being the big driver behind the growth in SMSF.
"It's a response to government policy, which in itself is a response to demographic change."
Originally published on SMSF Essentials.
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