The SMSF gender pay gap: The right direction for an equal future

At the start of September 2021, SMSF software provider ‘Class*’ released their annual benchmark report which analysed SMSF data from the 2021 financial year. Key findings in the report make for interesting reading.

Changing audit landscape

The SMSF audit landscape is currently undergoing significant change as a result of the restructured APES 110 Code of Ethics for Professional Accountants. It is no longer possible for an accounting practice to offer both accounting and audit services to the same client. Class’ research indicates that this change will see the administrators of approximately 30–40% of all SMSFs searching for a new, independent auditor.

Since 2015, the number of auditors servicing SMSFs has decreased by 21%, while the total number of SMSFs has increased by 8.8%. As it stands, 6.4% of SMSF auditors are currently servicing 54.3% of all SMSFs. This trend points towards an increasing demand for independent auditors, where supply is already limited, adding extra strain to the industry. It is estimated that more than 200,000 SMSFs now require a new independent auditor. PKF had transitioned its SMSF audits to a new provider. Get in touch with us for more information.

SMSFs show resilience and sustained growth during COVID-19

The COVID-19 pandemic caused havoc in the Australian financial markets, which directly impacted the superannuation industry. The ATO introduced the ‘early release covid payment’ for individuals facing financial hardship. The hardship payment allowed qualifying individuals to withdraw $20,000 from their superannuation balances over two financial years, which had a significant impact on individual member balances and the asset value of the superannuation industry as a whole.

Australian Prudential Regulation Authority (APRA) Funds handled upwards of 2.7 million release authorities totalling $19.9 billion, whereas SMSFs accounted for 22,000 release authorities totalling $215 million. SMSFs accounted for only 1% of early releases in the 2020 financial year, despite representing 26% of superannuation assets.

It is also interesting to note that the average net assets per SMSF have recovered and grown to all time highs, outpacing pre COVID-19 values.

Shifts in gender contributions and member balances

There has always been a gender gap issue when it comes to superannuation member balances, however, this has received increased attention in recent years and the ATO have been working with the superannuation industry in an attempt to narrow the gap.

There is still a significant gender gap which needs to be addressed but the recent Class data suggests this gap is closing, albeit at a slow pace.

An example of recent legislation impacting the superannuation gender gap is the downsizer contribution which started from 1 July 2018. The downsizer contribution enabled eligible individuals to contribute up to $300,000 from the proceeds of selling their home. This legislation appears to be having a direct impact on the gender gap with 19% more female members making downsizer contributions than males.

The behaviours toward long-term investment strategies for females is changing. Female balances have grown faster than male balances since 2016, outperforming them by 4%. Female balances have also grown from 79% to 84% of male balances, further supporting the trend towards closing the gender gap. Although these stats show that the industry is heading in the right direction, work still needs to be done to reach parity between the two genders.

If you are curious about how the SMSF world can benefit your future, get in touch today.

* Class has a market share of approximately 30% and the data in their report is anonymised and considered to be representative of the market.