SMSFs resonate with younger Australians, drives record growth

Their increasing appeal to younger generations has seen self-managed superannuation funds (SMSFs) enjoy record growth in the face of regulatory uncertainty, according to cloud accounting and administration software provider Class’ 2025 Annual Benchmark Report.

The report found that the SMSF industry recorded its strongest growth since 2017 in the 2024/2025 financial year to 30 June, with the number of SMSF establishments growing by 6.4 per cent or 42,000 – taking the total number of SMSFs to 653,062 currently holding over $1.05 trillion in assets.

The research also confirmed the popularity of SMSFs among younger generations as they look to engage more and earlier with their wealth and superannuation, with Generation X (45-to-59-year-olds) accounting for 49 per cent of new establishments over the year and Millennials (30-to-44-year-olds) accounting for 37.3 per cent.

Given the current conditions of the property market, the report suggested that SMSFs may have also attracted younger accountholders so they can leverage its benefits to enter the housing market.

“Residential property remains dominant, accounting for around half of a fund’s assets, (whether held outright or with a Limited Recourse Borrowing Arrangement (LRBA)), versus about one-third for funds holding commercial property,” the report said.

“Around one in four property investments in Class SMSFs are funded through LRBAs, with about 92% of LRBAs tied to residential property. This could imply that SMSFs are being considered by younger Australians as a pathway into the housing market at a time when affordability remains a national challenge.”

The average age of new SMSF accountholders via Class was 48 years old, compared to 61.6 years when all SMSF members are considered.

The report emphasises SMSFs are actively considered a long-term solution rather than a “short-term experiment”, with the average SMSF on Class running for 15.6 years and 66 per cent of funds for more than a decade. The average SMSF fund balance is just under $1.9 million and the average member balance is $990,000.

“SMSFs continue to attract a broadening range of Australians who want flexibility, choice, and control in how they save for their retirement. This growth demonstrates the sector’s resilience and its ability to evolve in line with members’ needs, even as the regulatory landscape shifts,” Class CEO, Tim Steele, said.

“SMSFs are not short-term experiments, they are a strategic solution for long-term wealth creation and increasingly are a cornerstone of retirement planning in Australia.”

Given the impending legislation of the proposed changes to the Division 296 tax, the report also highlights how far the impact will reach across the SMSF industry.

“The proposed Division 296 tax changes are expected to have a larger impact than previously estimated. Analysis of FY24 Class tax return data shows that approximately 18,200 Class members could be affected, each facing an average liability of $51,700,” the report said.

“This equates to a potential total tax liability of $940.9 million for Class members only, up from previous market data estimates of $825 million, indicating that SMSFs overall are likely to contribute significantly to the Government’s projected $2.3 billion in tax revenue during the first year.

“Given the S&P/ASX 200 increased by 10.2% during FY25, with one in four SMSFs holding more than 27.5% of their portfolio in domestic shares, a greater proportion of SMSFs could potentially exceed the $3 million threshold.”