Members of SMSFs have acknowledged that the funds may become a burden when they reach a certain point in their life and no longer have the cognitive ability to make the right decisions. At this point, a portion is likely to transfer their investments to an allocated pension with an industry fund.
Australian Institute of Superannuation Trustees (AIST) CEO Tom Garcia says many super funds are now offering options that have the look and feel of an SMSF, without the hassle of running the fund or paying high fees to auditors and accountants.
“As most SMSFs are invested in assets that are no different to the term deposits and shares offered by the super funds, we expect these new options offered by super funds will be increasingly popular – as people’s super balances grow and there is a greater awareness of the extra responsibility and costs of running a stand-alone SMSF.”
Pre-retirees are showing more confidence in the Industry fund sector, with 20% believing the funds will offer the best overall retirement solution, according to CoreData research. This was compared to 16.7% who thought an SMSF would be better. ‘Post-retirees’ were more supportive of the SMSF sector however, at 27.1% compared to 19.0% in Industry funds, but most respondents were not sure at all as to who offered the best retirement solution.
Garcia says Industry funds are also tackling the underinsurance problem by raising levels of default cover; higher automatic acceptance levels of cover; providing insurance advice; educating members about insurance needs; and providing tools like insurance calculators.
“The not for profit sector has always offered some the best insurance deals around and we expect the market to become even more competitive as insurance offerings emerge as a key product differentiator as funds launch their MySuper products from 1 July this year.”
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