Small funds most impacted by Budget changes

Smaller superannuation funds are likely to be more exposed than others to the Government’s Budget superannuation changes dealing with accounts with balances lower than $6,000, according to specialist ratings house, SuperRatings.

It said that smaller funds had nearly 45 per cent more low balance accounts as a proportion of total membership than the average fund, leaving them most exposed to the Federal Government’s cap on fees for low balance accounts.

The findings flow from a SuperRatings assessment of the impact on super funds resulting from the Federal Government’s proposed three per cent cap on fees for super accounts with balances lower than $6,000.

The SuperRatings analysis revealed that smaller funds (defined as funds with less than $2 billion of net assets) had around 38 per cent of total accounts with a balance lower than $6,000, compared to 26 per cent for all funds and 22.5 per cent for large funds.

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It said the prevalence of low balance accounts within smaller super funds was even greater below the $4,000 threshold with nearly 34 per cent of all accounts held within smaller funds having balances below $4,000 compared to 22 per cent for the median and 19 per cent for the largest funds.

The SuperRatings findings follow on from a Rice Warner analysis that the level of cross-subsidisation within industry funds would mean they were more exposed to the insurance within superannuation changes contained in the Budget.