SMSF trustees anxious about retirement incomes
Self-managed superannuation fund (SMSF) trustees are less confident about reaching their target retirement income than they were a year ago, according to a study by the SMSF Professionals' Association of Australia (SPAA).
The Intimate with Self-Managed Superannuation study, commissioned by Russell Investments in conjunction with SPAA and conducted by CoreData, found that only 17.2 per cent of trustees were confident about reaching their target income in retirement.
In last year's report the figure was 34.1 per cent.
In particular, two-fifths of women are concerned that they will fall short of their retirement income - despite the fact that they have more moderate retirement income expectations than men. Only 27.1 per cent of male trustees hold similar concerns.
The reduction in confidence was down to the local and international economic environment, along with trustee concerns about the Government's superannuation policies, according to the report.
Over the last 12 months 20.5 per cent of trustees reported a negative return, compared to only 1.5 per cent in 2010.
The report also found that the high cash holdings in SMSFs were now part of a "deliberate risk reduction strategy", rather than representing money "sitting on the sidelines" awaiting an investment opportunity.
The number one reason for overweighting to cash is a desire to reduce risk (48.9 per cent), eclipsing concerns about cost and return, according to the report.
There is also a demographic shift underway in the sector, with SMSFs becoming more popular with younger people. The proportion of do-it-yourself funds with balances under $150,000 increased to 20.4 per cent from 8.2 per cent in the previous year.
In addition, 13.7 per cent of Generation X respondents (31-45) and 10 per cent of Generation Y respondents stated their intention to establish an SMSF within the next two years. Only 10.5 per cent of baby boomers intend to establish an SMSF within the same timeframe.
A perception that it is not worthwhile to establish an SMSF without a large account balance is a barrier to future growth in the sector, according to the report.
"Yet many of those who hold this perception have balances of at least $350,000, a level at which having an SMSF may indeed make sense," said the report.
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