Why SMSFs hold a lion’s share of retiree market

It seems almost an understatement to say that the self-managed super sector holds a lion’s share of superannuation’s retiree market in dollar terms.

The recently-published Superannuation Market Projections report by consultants Rice Warner calculates that SMSFs hold more than half of the assets invested in superannuation retirement products. No other superannuation sector comes anywhere close.


This market share is explained in part by such factors as the higher average age of SMSF members and their much larger average balances. Another factor is that almost all SMSF members take their super as a pension upon retirement rather than a lump sum.

As a growing proportion of the population ages, builds-up their super wealth and enters retirement, industry super funds in particular are expected to increase their share of the retirement market.

Yet SMSFs are projected to keep holding by far the biggest share of the retirement market, again in dollar terms, for many years to come.

Rice Warner expects that the market share of retirement assets held by the various fund sectors to change over the next 15 years to: SMSFs, 44.2 per cent (52.5 per cent today); industry funds, 17.8 per cent (6.1 per cent today); commercial funds, 29.1 per cent (32.1 per cent today); public-sector funds, 8.9 per cent (8.4 per cent today); and corporate funds, nil per cent (0.9 per cent today).

Given that the SMSF sector has the largest share of retirement assets today, it will, of course, experience the biggest share of pension withdrawals.

Further, the new lower contribution caps from July 2017 will make it harder for members to establish very large SMSFs in the future, Rice Warner emphasises. In turn, this will have an impact on the SMSF share of assets in the pension phase.

Meanwhile, industry funds will take a markedly larger share of the retirement market – up from just 6 per cent today – as growing numbers of their members retire. Another factor at play is that industry funds keep improving the competitiveness of their pension products to retain members into retirement.

From an individual super member’s perspective, these market share stats are yet another reminder of the need to save and plan for a retirement that could be fast approaching for many of us – if it isn’t here already.

Perhaps you among those baby boomers who can clearly remember back to the days when their intended retirement date was sometime in the far, far distant future? Well, that future may be fast arriving.


Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2017 Vanguard Investments Australia Ltd. All rights reserved.


Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for their action or any service they provide.