SMSF members in particular, the submission said, have diverse economic and lifestyle factors such as different risk tolerance, income needs, investment strategies and estate planning considerations.

“They also have autonomy to invest their funds with the broadest choice afforded by the super legislation. The use of a reference portfolio may lead to considerations that are conceptually sound, such as what a model portfolio may look like, but may in fact differ from a large percentage of actual SMSF portfolios,” the submission said.

“Further, using the asset allocations as reported in the SMSF tax returns, does not allow a full look through to the true underlying asset class which may make it difficult to compare a reference portfolio with accuracy.”

This occurs, the submission explained, as some SMSF investments are recorded for tax purposes as Australian equities because they are listed on the ASX, but the actual exposure is to another asset class, such as bonds or Asian equities.

The submission stated that if the Commission does decide to utilise reference portfolios for SMSFs, it should then provide a variety of models that incorporate different risk measures, investment strategies, estate planning considerations and taxation arrangements that are reflective of the broader SMSF population.

The submission also suggested that the in its analysis of costs incurred by funds and fees charged to SMSF members, the Productivity Commission should separate fees that are regulatorily imposed and inelastic, like auditing fees, and fees that are set at the discretion of the fund or service provider.

“We suggest an additional sub-criteria be inserted to formalise these metrics. This will provide greater consistency and accuracy in the measurement of data,” said Dixon Advisory.