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Financial market volatility drives a decline in super assets

By Reporter
3 minute read

APRA has released its superannuation statistics for the December quarter.

New data from the Australian Prudential Regulation Authority (APRA) has revealed that superannuation assets totalled $3.39 trillion at the end of the December quarter of last year.

According to APRA’s quarterly superannuation performance publication released on Tuesday, this represented a 3.0 per cent decline in value over the past year.

“This reflected volatility in financial markets following aggressive monetary tightening by global central banks to curb inflation, which slowed economic growth,” the regulator said.

However, an increase of 2.5 per cent was seen on a quarterly basis, which APRA attributed to a positive change in the performance of investment markets during the December quarter.

Total assets in MySuper products were $917.3 billion at the end of the quarter, representing a quarterly increase of 3.4 per cent but an annual decrease of 3.1 per cent.

“For the year ending December 2022, the number of entities offering a MySuper product has reduced from 61 to 52 reflecting recent consolidation activities in the industry,” APRA noted.

Contributions totalled $38.5 billion for the quarter and $154.4 billion for the year, an 11.1 per cent increase in comparison to the year to December 2021.

Employer contributions totalled $30.3 billion for the quarter and $114.9 billion for the year, 11.8 per cent higher than in the 12 months to December 2021.

“This is likely due to the Superannuation Guarantee (SG) increase to 10.5 per cent per annum from 1 July 2022 and strong labour force figures over the year,” the regulator explained.

“For the year ending December 2022, SG contributions ($88.5 billion) accounted for around three-quarters of employer contributions and this proportion is expected to increase alongside the SG increases.”

Member contributions totalled $8.2 billion for the quarter and $39.5 billion for the year, an 8.6 per cent increase annually when compared to December 2021. 

“While there were large spikes observed in 2021 following COVID-19 and its related initiatives, member contributions have continued to increase and remain above historical trends,” APRA said.

Meanwhile, benefit payments totalled $24.9 billion for the December quarter and were up 11.3 per cent over the year to $91.6 billion. 

According to APRA, the rate of return for entities with more than six members during the December quarter was 3.7 per cent while for the year it was negative 5.5 per cent.

The regulator pointed out that this annual change represented a significant decrease compared to the annual rate of return of 12.9 per cent seen in December 2021.

“Investment markets have been volatile over the year owing to aggressive monetary tightening by global central banks to curb inflation which slowed economic growth,” it said.

“The five-year average annualised ROR was 4.7 per cent, down from 7.9 per cent in December 2021.”

Total assets for entities with more than six members increased by 2.6 per cent over the December quarter to $2.5 trillion. 

With $2.2 trillion in investments, 53.1 per cent was reported to be in equities including 22.5 per cent in Australian listed equities, 25.5 per cent in international listed equities, and 5.1 per cent in unlisted equities.

Fixed income and cash investments accounted for 28.3 per cent of total investments, while property and infrastructure accounted for 16.2 per cent, and other assets, including hedge funds and commodities, accounted for 2.4 per cent.