“They may be unable to find a financial adviser with whom they feel comfortable. Or given their total net wealth they may be reluctant to pay for financial advice,” the submission said.

The submission also noted that public practising accountants can no longer recommend that an SMSF with small or modest total assets be closed.

“Accountants in this situation are only permitted to factually discuss with [an] SMSF trustee their various options and then, if requested, act upon the trustees’ decision,” it said.

“This is also an issue for SMSF trustees with various mental impairments such as senility.”

CA ANZ noted in the submission that there are plenty of valid reasons why low-balances SMSFs do exist.

“An SMSF may have a temporarily low balance because substantial contributions or benefit transfers will be made in the future [or] the members in the fund wish to use their SMSF to hold a specific investment that is not available in other vehicles, for example, artwork, collectibles or real estate,” the submission said.

“Active market traders who wish to use some of their retirement savings to actively trade a small portion of their retirement savings and have decided it is easier to have this money in a separate entity.”

CA ANZ said it was clear from the feedback of its members that the majority of smaller-balance SMSFs are established for a specific purpose or will not have a low balance for an extended period of time.

The submission said CA ANZ is concerned that the Commission’s findings about the SMSF sector – especially that SMSFs with lower balances have lower returns than some APRA-regulated funds – may be used by others to “attack that sector primarily for competitive reasons”.

Both the submissions from Industry Super and Association of Superannuation Funds of Australia (ASFA) focused heavily on the performance between APRA-regulated funds and SMSFs and in particular the expense ratio of SMSFs as a percentage of assets.

Both Class and the SMSF Associations have raised concerns about the data used in the Productivity Commission report to draw comparisons on performance.

“Most industry, corporate, public sector and retail super funds have a small cohort of members with large balances and many members with small to moderate balances. In many cases the small cohort of large balance members pay the majority of the fees used to run the fund,” CA ANZ said in its submission.

“As a result of this potential loss of larger balance members, many industry and retail super funds have taken active strategies to address this competition from SMSFs. It is our firm view that SMSFs have provided important competitive pressure on APRA regulated super funds that in most cases otherwise would not have existed.”