SMSFs most popular among young females: Class

The 2022 Annual Benchmark Report released by wealth fintech firm, Class, revealed female members of self-managed super funds (SMSFs) made more non-concessional and downsizer contributions than males, leaving their balances to grow faster than their counterparts’.

This comes as SMSFs now occupy 26 per cent of the $3.4 trillion superannuation sector and millennials have maintained their position as the most popular age group to establish an SMSF for the last three years.

The report showed millennials aged 35 to 44 now made up 30 per cent of all new SMSFs established during the 2022 financial year, with the average age of SMSF members decreasing from 51 to 46 years.

Females made 15 per cent more downsizer contributions during the most recent financial year than the one before and have had their balances grow four per cent faster than males since 2017.

“This is probably down to many funds adopting balance equalisation strategies, where one member, who typically has a higher balance, are taking payments from their SMSFs and giving it to their partner, the other member, with a lower balance for recontribution,” the report said.

“This trend reinforces what we know about societal shifts, where women are taking more ownership when it comes to household finances and have a more active view of financial independence… further validating the trend towards an equal balance between the two genders.”

Class chief executive, Tim Steele, also said the report’s findings show Australians are looking to SMSFs to reach their retirement goals more than ever.

“The Class Annual Benchmark Report shows the SMSF sector continues to grow as millennials become more engaged and interested in their financial future,” he said.

“Recent changes in both Superannuation and SMSF legislation have made it easier for people to make additional contributions, whether it’s from the proceeds of selling a home or through the carry-forward rule of unused concessional contributions. All these options can be a great way to grow balances faster.”

Jo Hurley, General Manager of Growth at Class, said it was great to see females and millennials leading the charge on new fund establishments and voluntary contributions.

“It’s clear that the profile of SMSF members is changing. New members are younger, more tech savvy, and looking for options that support them in their retirement by giving them more choice and flexibility,” she said.

“We have seen a real increase in the visibility of SMSFs and the benefits they can provide for customers, and this is translating into growth for the industry.

“The report sends a positive message that women are taking action to create more financial freedom for themselves and looking for ways to get ahead. It’s great to see the rise in concessional and non-concessional contributions being made to boost their super balances.”