Australia’s total superannuation assets reached $3.54 trillion at the end of June quarter, according to new data from the Australian Prudential Regulation Authority (APRA).
This figure is 7.6 per cent higher than a year earlier, when total assets sat at $3.29 trillion, and up 1.4 per cent on the $3.49 trillion in assets reported at the end of the March quarter.
Additionally, over the year to June, total APRA-regulated assets grew by 9.3 per cent to $2.45 trillion, of which $996.0 billion (+13.0 per cent) was in MySuper products.
“The growth in superannuation over the past year was driven by strong contribution inflows, reflecting higher employment growth, higher wage inflation and strong investment market returns,” APRA explained.
APRA reported that contributions rose by 12.9 per cent during the year to $165.2 billion.
“Employer contributions increased by 12.9 per cent over the year to $122.5 billion. Member contributions increased by 13.1 per cent over the year to $42.7 billion,” the regulator said.
On an annual basis, benefit payments increased by 19.6 per cent to $102.1 billion. This included a 31.9 per cent jump in lump sum payments to $58.8 billion and a 6.1 per cent increase in pension payments to $43.3 billion.
Net contribution flows fell by 4.5 per cent compared to the year prior to $60.8 billion. APRA noted that growth in benefit payments outpaced growth in total contributions.
Meanwhile, total self-managed super fund assets increased by 3.9 per cent to $876.4 billion.
Strong start to the financial year for super funds
According to figures published by Chant West on Tuesday, the median growth super fund option (with 61 to 80 per cent in growth assets) had a strong start to the financial year, delivering a return of 1.5 per cent in July.
This came after a 2.9 per cent lift for Australian shares during the month and a similar rise for developed market international shares in hedged terms (or 2.1 per cent unhedged). Emerging markets outperformed developed markets with a return of 4.9 per cent.
“With share markets performing strongly, naturally it was the higher risk investment options that benefited most,” commented Chant West senior investment research manager Mano Mohankumar.
The median “all growth” option (96–100 per cent growth assets) returned 2.5 per cent in July and the median “high growth” option (81–95 per cent in growth assets) returned 1.9 per cent.
In contrast, the median “balanced” (41–60 per cent growth assets) and conservative (21–40 per cent growth assets) options delivered returns of 1.2 per cent and 0.8 per cent, respectively.
Chant West reported that all of the risk categories had generally met their long-term return objectives. These typically range from CPI + 1.5 per cent for conservative funds through to CPI + 4.25 per cent for all growth funds.
“MySuper products have only been operating for about nine and a half years, so when considering performance, it’s important to remember that super is a much longer-term proposition,” the firm said.
Since compulsory super was first introduced in July 1992, Chant West indicated that the median growth fund had returned 7.8 per cent p.a.
With an average annual CPI increase of 2.6 per cent over this period, the median growth fund has had a real return of 5.2 per cent p.a., which is above the typical target of 3.5 per cent.
“Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007–09, COVID-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 7.4 per cent p.a., which is still comfortably ahead of the typical objective,” the firm added.
