Superannuation savings pool tops $1 trillion

Australia's superannuation savings pool has increased to $1.23 trillion with investors enjoying the first positive returns in three years. As reported by APRA (Australian Prudential Regulation Authority), the Australian superannuation industry is recovering well, with Australians pouring more than $100 billion into superannuation funds in 2009/10.

Employer and member contributions totaled $107.7 billion for the 12 months to June 30, 2010, driving the value of Australia's superannuation assets up by $150 billion, or 13.9 per cent, to touch $1.225 trillion.

Australia's private superannuation pool has doubled in value since 2004, and has pushed Australia's total superannuation funds under management to more than $1.7 trillion - the world's fourth biggest asset pool and the largest in Asia.

Industry super funds

Superannuation industry fund returns lagged other sectors, adding just 8.5 per cent to members' account balances, despite receiving 17.9 per cent of fund inflows - the biggest inflow share of any sector during the year.

They now hold 18 per cent of Australia's total superannuation savings pool, but are still behind retail superannuation funds' 28 per cent share and the 32 per cent held by small superannuation funds that include 432,170 self managed super funds (SMSF's).

Retail superannuation funds gave members an 8.7 per cent return and still hold over 16 per cent of the nation's 32.9 million member accounts - the biggest share of any sector - thanks to an average 219 investment options available per fund.

By contrast, industry superannuation funds offered members an average of just nine investment options in their fund, with members choosing to channel two-thirds of all industry funds' assets into default options, APRA said.

Retail super funds

Retail superannuation fund members were more active, with default investment options accounting for 22.9 per cent of all retail fund assets by June 30, 2010, APRA said.

Australian share funds took around 30 per cent of industry, corporate, and public sector fund assets directed into default investment strategies, at the expense of Australian fixed interest which accounted for around seven per cent.

Retail fund members selecting default investment options sent a quarter of the assets into Australian equities, and 20 per cent into local fixed interest superannuation funds.

International shares accounted for 23 per cent of default option assets across all sectors, while unlisted property accounted for seven per cent.

Positive superannuation performance

Investors made an average return of 8.9 per cent during the year, according to the APRA's review of superannuation entities with more than four members.

But the positive returns were recorded on a low base caused by financial crisis-induced losses of around 10 per cent in the previous two years, and after the local share market climbed about 11 per cent from July 2009 to July 2010.

Public sector superannuation funds were the best performers, returning 9.8 per cent in 2009/10, while corporate funds delivered 8.9 per cent, but had the smallest growth in the number of assets, APRA said.

Superannuation investment advice

APRA's figures provide further proof that around 80 per cent of workers prefer that someone else make their superannuation decisions, with default investment strategies being applied to 60.3 per cent of public sector fund assets and 50.8 per cent of corporate fund assets.

That apathy was a driver of the federal government's decision last August to adopt the Cooper superannuation review's recommendation for low-fee default superannuation accounts, known as MySuper.

MySuper is scheduled to begin on July 1, 2013.

Source: APRA 2011

January 2011