Self-managed super fund quarterly statistics methodology

Self-managed super fund quarterly statistics methodology

Overview

We use an estimation model that basically works out averages for various self-managed super fund (SMSF) quantities and extrapolates these to the entire population of active SMSFs to arrive at estimated totals. The model follows previously established procedures and is broadly accepted by industry, regulators and commentators. Both Australian Prudential Regulation Authority (APRA) and the Australian bureau of statistics (ABS) have been consulted for this model, and both agree with the methodology. However, in using or presenting this data it is important to stress that it is a statistical estimate.

Data sources

The primary source of data is the SMSF annual income tax return, in particular the associated regulatory component of this return ('return data'). From the 2008 financial year onwards, the SMSF annual return data is used. The key limitations associated with these returns are their frequency (annual) and currency (the returns are not due until some months after the end of the financial year).

Number of SMSFs

A significant figure for the estimation of SMSFs statistics is the number of funds. This is obtained from the formula:

 Fund no. = (No. SMSFs established with us) − (No. SMSFs that have notified us they have wound up.)

This figure will be subject to historical revisions due to late notice of:

1. establishments, and
2. wind ups. A potential concern is SMSFs winding up and failing to notify us, although it is thought the compulsory nature of annual tax returns will help minimise this problem.

Newly established funds

The characteristics of SMSFs in their first year of establishment ('new funds') and older funds ('continuing funds') are significantly different, especially with regard to 'flows' into and out of the fund (such as contributions, transfers and benefits). The two categories are therefore treated separately, and then combined together, in the production of estimates.

Assets

The calculation for total must take into account asset growth over the period as well as monies flowing into and out of SMSFs.

Total assets for the June quarter each year is estimated by referring to return data for that year, when sufficient data becomes available, using the formula below (substituting assets for α).

 Total α = (Number of new funds x Average value for new funds) + (Number of continuing funds x Average value for continuing funds)

Total assets for other quarters are obtained by estimating the changes from the most recent June quarter, using the following formula:

 Assets = (Previous quarter assets) + (Previous quarter assets x investment return for each asset type) + (Apportionment of 'flows' - see below)

Investment return for each asset type is based on the following indices, the sources of which are detailed in Appendix A:

 Life insurance policies Growth in all assets invested in life insurance Other managed investments Growth in superannuation assets invested in managed funds Real property (pre 2008); Non-residential and residential real property (2008 onwards) ABS housing price index Other property (pre 2008); Loans; Artwork, collectibles, metal or jewels (2008 onwards); Other assets Consumer price index Listed/unlisted shares and equities, overseas assets ASX all ordinaries accumulation index Public/other trusts (pre 2008); listed/unlisted trusts (2008 onwards) Growth in superannuation assets invested in trusts Cash, debt securities & term deposits, Derivatives and instalment warrants (2008 onwards) Return on 1 year fixed term deposits / 4

Contributions, benefits, transfers and expenses

Monies flowing into or out of an SMSF increase or decrease the value of assets held in that SMSF. For each 'flow' to be estimated, an average figure per fund is calculated from the return data. The values of contributions (member and employer), transfers (inward and outward), benefit payments, and expenses (administration and investment, and other expenses), are calculated using the formula above (where Total α represents the quantity being estimated).

Total flows are then calculated as:

 Flows  = (Member contributions) + (Employer contributions) + (Inward transfers) − (Outward transfers) − (Benefit payments) - (Administration and investment expenses) - (Other expenses)

This total is essentially divided by four to provide an estimated quarterly figure. Small adjustments are made to account for new funds entering the system as well as funds that have wound up. These 'flows' are then apportioned across the different types of assets based on average asset allocation in the previous quarter.

Members

Similarly, for the number of members to be estimated, separate averages are calculated for new and continuing funds from the return data. Total SMSF members is then estimated by using the formula above (substituting members for α).

Appendix A

Sources for the asset indices used to simulate asset growth between June quarters.

Australian Bureau of Statistics: Statistics by catalogue

APRA publications: Superannuation statistics

Reserve Bank of Australia: Bulletin statistical tables

 Asset Label Source of index Life insurance policies June 2008 onwards: APRA's Quarterly Life Insurance Performance, Table 2a - Total Assets. Pre June 2008: APRA's Life Insurance Quarterly Report, Table 4 - Total Assets. Other Managed investments ABS Cat No. 5655.0 (Managed funds), Table 8 (Investment managers), column F (Managed funds - Superannuation funds). Real property (pre 2008); Non-residential and residential real property (2008 onwards) ABS Cat. No. 6416.0 - House Prince Indexes: Eight Capital Cities Table 1, column J (Price Index of Established Homes; Weighted Average of 8 Capital Cities). PLUS an estimate of rental income (see below) Estimate for average rental income based on weekly rent of 0.1% of the value of the property. This is multiplied by 13 to achieve a quarterly estimate - ie a factor of 1.3%. Listed/unlisted shares and equities, overseas assets RBA table F7 (Share Market), S&P/ASX 200 Accumulation Index. Public/other trusts (pre 2008); listed/unlisted trusts (2008 onwards) Assets in trusts are treated as though half were invested in equities and half in property. Index is [(equities + real property + other property + rent) / 2] Cash, debt securities & term deposits, Derivatives and instalment warrants (2008 onwards) RBA table F4 (Retail Deposit and Investment Rates), column M (Banks' Term Deposits (\$10,000) - 1 yr). Note: the value used is the one from 1 year before, to measure the return on an investment of cash made 1 year ago. Other property (pre 2008); Loans; Artwork, collectibles, metal or jewels (2008 onwards); Other assets ABS Cat. No. 6401.0 - Consumer Price Index, Table 1, column J (Index Numbers; All groups; Australia)

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