Spike in SMSF establishments as investors seek to regain control over their retirement savings

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By Suzie Barnaby
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15 June 2020, 11:00 AM

SMSF numbers increaseing due to COVID-19 market volatility

SMSF Association chief executive, John Maroney has said that registrations of self-managed super funds (SMSFs) have been increasing, with “SMSF registrations for January and February 2020 increasing by 15.6% compared with the same period last year, and data up to 25 March indicating that March registrations were running 6% above those in March 2019.”

Suzie Barnaby, Senior Financial Planner at Morgans Port Macquarie believes that “This may be an investor reaction toward having greater control over their investments in the wake of the Covid-19 market volatility, and there may also be a reaction to concerns about early access to super causing asset sales by the public-offer funds to fund these redemptions”. Access to cash is also a probable driver, says Maroney.

“That’s a really interesting dilemma for a lot of retirees; they’re concerned about selling-down securities to finance their income, with interest being so low, equity dividends being cut or deferred, and property rents being suspended or reduced.

With a well-managed SMSF, if you’re in retirement phase, holding a couple of years’ worth of cash means people have that option of drawing-down cash, without having to sell any securities at the bottom of the market.

But where the cash is held in a unitised vehicle, you have to sell a part of everything to get the cash,” Maroney adds. Maroney says “the SMSF Association always encourages people to research that suitability in terms of comparisons, both in terms of deciding to establish an SMSF and in maintaining it”.

Barnaby agreed with Maroney’s comments around cash saying that “Retirees with SMSFs value knowing exactly how their funds are invested within their SMSF. And that they can ensure adequate cash is available to fund pension payments without needing to sell down on growth assets like shares and property at depressed prices”.

Source: Inside Adviser

Find out more

Suzie is a Senior Financial Planner at Morgans Port Macquarie. Suzie’s passion is supporting and educating clients so they can make well-informed decisions in relation to their own financial situation.

If you would like to discuss if a SMSF is appropriate for you, please contact the Morgans Port Macquarie office on [email protected] or via (02) 6583 1735.

General Advice warning: This article is made without consideration of any specific client’s investment objectives, financial situation or needs. It is recommended that any persons who wish to act upon this report consult with their investment adviser before doing so. Morgans does not accept any liability for the results of any actions taken or not taken on the basis of information in this report, or for any negligent misstatements, errors or omissions.

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