Labor calls for tougher rules on SMSFs
The Federal Opposition is calling for tougher regulation and clearer disclosure of self-managed superannuation funds (SMSFs) following the release of Australian Taxation Office (ATO) figures on asset values and fees charged in SMSF accounts.
Labor Senator Nick Sherry, the Opposition spokesperson on superannuation, described as “frightening” the high fee levels and substantial number of SMSFs with low asset balances revealed in the ATO figures he released on Friday.
Sherry said the ATO data showed over $8 billion was held in SMSFs that had balances less than $200,000, the generally recognised minimum for SMSFs. He said this illustrated massive levels of mis-selling.
Sherry said the figures showed SMSFs with balances under $50,000 in assets were charged annual fees of between 3 and 6 per cent, or around $1,500, while asset values of $50,000 to $200,000 incurred annual fees of between 2 to 3 per cent or $2,902.
Chant West principal Warren Chant said he believed some people who had set up their own funds with smaller balances would close them as they came to understand more about the costs and administrative requirements.
Recent research from Investment Trends found that the average starting balance for a SMSF established in the past two years was $300,000, and that the establishment of SMSFs peaked in 2002-03.
But Sherry said even for funds with balances greater than $300,000 the ATO data suggested annual fees were often very high, at between 2 and 3 per cent or $11,828.
He said many individuals who had established such funds were being ripped off and greater regulation and disclosure of products was required immediately.
AXA general manager, sales and marketing, Adrian Emery said annual administration fees for AXA’s recently released SMSF service intentionally penalised funds with balances below $250,000 to discourage the initiation of SMSFs with balances considered too small to be viable. He said fees charged in AXA’s service were between $2,350 and $3,550.
Sherry’s calls for greater control echo his appeal last November for the simplification of the overall super choice regime, which followed the tabling of an Australian Securities and Investments Commission (ASIC) report that highlighted several cases of mis-selling of superannuation, only one of which had been identified as a result of a consumer complaint.
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