Industry fund growth will continue at high levels and will be on par with the retail segment in a few years, according to a report by professional services firm Deloitte.
From 2009 to 2029, industry funds’ pre-retirement assets are projected to have an 11 per cent per annum compounded growth rate, compared with around 12 per cent per year compounded for self-managed superannuation funds (SMSFs), the report said.
“That’s driven by the strong flows from the 9 per cent superannuation guarantee,” Deloitte Actuaries & Consultants partner Michael Monaghan said.
“The other aspect which is important in the pre-retirement phase is new people joining the workforce who often tend to join an industry fund first.”
Pre-retirement assets in the retail employer and retail personal segments will grow below 10 per cent per annum compounded in the same period.
If industry funds can develop effective strategies to counter the transfer of their high account balance members, especially as they approach retirement, they make overtake the retail personal business segment earlier, the report said.
From 2009 to 2029, industry funds’ post-retirement assets are projected to have around 17 per cent yearly compounded growth, compared with around 14 per cent annualised for SMSFs.
The SMSF sector is the largest in the industry and the gap is expected to widen into the future due to the large number of retirements over the next 20 years as baby boomers leave the workforce.
“SMSFs are a huge market and caution will have to be exercised to ensure that any proposed policy changes do not create unintended or adverse consequences,” the report said.
