If one thing is guaranteed to get me seeing red, it’s other sectors of the superannuation industry taking pot shots at SMSFs via the media. They just can’t seem to help themselves, whether it’s about the dangers of gearing (LRBAs comprise less than 1% of SMSF assets), insisting trustees attain certain qualifications to run an SMSF, or for a fund to have a minimum funds under management before it can be established.

But for the sheer audacity of the claim, you have to take your hat off to CareSuper CEO Julie Lander, who said recently that SMSF trustees and members “were increasingly finding it a costly and time-consuming exercise they misunderstood before setting up. Worse still, closing an SMSF can be a very labor intensive and technical process”. She added that she expected the number DIY investors looking to wind up their SMSFs to grow and a service to aid wind-ups will spur that process along.

That Lander would make such a claim is hardly surprising. She has got form. In June 2013, she compared trustees to “punters” when it came to investment – “from the conversations I have had with people with SMSFs you can see that they are a bit like punters”.

If that’s the case, all I can say is that they are good punters, because a recent Rice Warner report (commissioned by the National Australia Bank) found that SMSFs, on average, out-performed the other super sectors in six of the past eight years between 2005 and 2012. They returned 7.7 per cent a year compared with 4.9 per cent for the rest of the industry. Taking fees into account, SMSFs produced a return of 6.8 per cent compared with 4.1 per cent. So remind me to chat to an SMSF trustee on Melbourne Cup day! 

But I digress. Evidently Lander is expecting the number of trustees to wind up their SMSFs to grow, and, to help them achieve that goal, CareSuper is partnering with the accounting and financial advisory firm Crowe Horwath to offer a service with that expressed purpose.

Well, I’m not sure where she gets her figures from but she can’t draw any comfort from the latest numbers from the Australian Taxation Office. In the five years to 30 June 2013, the tax man’s numbers show that, on average, for every five SMSFs established, one was wound up, with gross SMSF establishments of 34,800 a year and wind-ups of 7800 a year.

I think it’s fair to say that these numbers represent a trend, a growth trend of more than 27% over this five-year period. The simple fact is the trend is away from industry and retail funds and into SMSFs, especially as people near or enter retirement. At this stage of their lives, they want to have more control over their super.

It’s also interesting the reasons lander cites for people moving away from SMSFs – complexity, time or because the ATO steps in and shuts it down for compliance reasons. They are all valid reasons, but I can think of three more, and, in my experience, more often than not they are reason why SMSFs close.   

  • Death and ageing – more than 55% of trustees aged 55 plus and Old Father Time waits for no one;
  • The tax benefits of an SMSF are no longer relevant for retirees; they draw their money out and invest directly;
  • People move overseas and rolling over into an APRA-regulated fund is the easiest option.

I have no doubt that the SMSF sector will survive the slings and arrows of the other sectors; certainly I am not holding my breath waiting for it to stop. But surely there is a bigger picture here. Pick up the media almost any day and the industry is under attack, especially on the tax concession front. What we need now is unity of purpose – not internal warfare. Because we need a strong collective force to keep the foundations of superannuation intact.