As with estimated SMSF investment performance data, care must be taken when using the operating expense (OE) ratio figures because comparisons may not be meaningful. While the methodology used to estimate the operating expense ratio is as close as possible to APRA’s method, the data collected is not the same (see appendix 2).
From 2013 onwards, new labels were added to the SMSF annual return to collect information on non-deductible expenses incurred by SMSFs, particularly for those in pension phase. These labels have been incorporated in our calculation of OE ratio figures for 2013 and later years.
Due to changes in the data collection, the estimated average OE ratio of SMSFs in the year ended 30 June 2013 increased to 1.03%. By comparison, the average OE ratio over the four years to 2012 was 0.66%. Similarly, the average SMSF operating expenses value grew by 72% from $6,000 in 2009 to 2012, to $10,200 in 2013.
In 2013, SMSFs solely in the accumulation phase had estimated average operating expenses of over $9,900, while those in pension phase averaged $10,600. A comparison by the types of operating expense showed that SMSFs in pension phase had higher average expenses across most operating expense types, with the exception of ‘interest expenses in Australia’ and ‘forestry and managed investment scheme’ expenses.
As can be expected, graph 19 shows the estimated operating expense ratio for SMSFs declined in direct proportion to the increased size of the fund. In 2013, SMSFs with $50,000 or less in assets had an average operating expense ratio of 10.9%. This compares to SMSFs with more than $500,000 in assets that had an average of less than 1.5% (see appendix 1, table 22).