Those wishing to enter into a self-managed superannuation fund (SMSF) should have to meet a minimum balance under legislation, says HESTA chief executive Anne-Marie Corboy.
Speaking at last week’s CMSF in Brisbane on the panel discussion A Long Way to the Finish Line, Corboy (pictured below) said women in particular are vulnerable when signing on to SMSFs due to a lack of education on what is involved.
“We see a lot of instances of women with low account balances and on lower incomes having money transferred into their partners’ self-managed superannuation funds, [and] who don’t understand that they have responsibilities as a trustee,” she said. “Because of longevity risk, they’ll probably be the sole trustee of this fund at some point in the future.”
HESTA, which has $20 billion in funds under management and 750,000 members, has a predominantly female membership base of approximately 80 per cent.
Corboy queries the suitability of investment strategies for some women who are in partnership in a SMSF.
“It may suit their partner, but may not suit them. Does it have the insurance coverage that they need or is it something that suits somebody else in the fund?”
Corboy urged for greater education, particularly for women, arguing “a legislated amount before people go in to a self-managed super fund will help do that”.
Corboy noted that HESTA has more money going into its income stream than going to SMSFs, saying “that’s the way we’d like to keep it”.
“But that’s because we can promote a product that our members can use. We have an account-based income stream and it’s something that suits our member demographic, and members are using it and increasing numbers staying with it.”
First State Super chief executive Michael Dwyer, who chaired the panel, agreed that women were often more disadvantaged in SMSFs.
“The research shows that when we get our members in the room, usually they’re in a partnership and one partner knows a lot more than the other. And it just became so apparent that often it’s the female who signs on the dotted line without actually understanding why that’s the case.”
Dwyer said First State Super has run a number of research exercises on SMSFs. He believes SMSFs are a good product for some, but said many seem to be driven by benefits they don’t understand.
“The other fascinating thing was that everyone knew there was a tax advantage, but didn’t know what it was.”