Self-managed super fund (SMSF) balances are continuing to rise, approaching $1 million per member. However, this growth comes as the government considers a new tax targeting high-value retirement savings.
More Australians are opting for greater control over their retirement funds, driving the strongest SMSF growth in nearly ten years. New data shows the sector now holds $1.05 trillion, boosted by a surge in new accounts and increasing member balances. The average SMSF member now holds $990,000, up from $890,000 two years ago. While many are using this growth to adopt more tailored investment approaches, they could soon face higher tax obligations.
Platforms that support SMSFs, such as Hub24 and Netwealth, have enjoyed strong inflows compared to traditional industry funds. Over the past year, Hub24 gained $1 billion more in net flows than one of the largest industry super funds in the country. These shifts reflect a broader trend away from standardised super solutions as many financial advisers recommend SMSFs for clients with larger balances near retirement.
In the last financial year, 42,000 SMSFs were established, with nearly half set up by individuals aged 45 to 59. This indicates a growing preference for active wealth management ahead of retirement. The average SMSF has now reached a fund size of $1.9 million, showing the increasing influence of this segment.
However, the rise in balances places many SMSFs squarely in the path of the proposed tax on super balances exceeding $3 million. Software provider Class estimates the SMSF sector could contribute $3 billion in extra tax revenue, which is nearly one-third more than the federal government’s projection for the whole retirement sector. If the tax is passed, individual liabilities may average $52,000, raising concern for members with high-value portfolios.
Although the precise structure of the tax remains under discussion, its impact on SMSFs with large balances appears likely. With asset values expected to keep increasing, the potential tax burden on these funds may continue to grow.
