Australia’s total superannuation assets dipped by 0.1 per cent over the September quarter to $3.56 trillion, according to the Australian Prudential Regulation Authority (APRA).
In its quarterly superannuation performance publication on Tuesday, the prudential regulator confirmed that growth was maintained on an annual basis with an 8.5 per cent increase in total super assets in the year to September.
“The growth in total superannuation assets over the year ending in September 2023 was driven by continued strong contribution inflows and positive investment returns,” APRA said.
“However, total superannuation assets declined over the September 2023 quarter due to an increase in member benefit payments and negative investment returns in the quarter.”
The rate of return for super entities with more than six members declined from 1.9 per cent in the June quarter to -0.5 per cent in the September 2023 quarter, which APRA attributed to negative returns in equity markets across major economies including Australia.
The rate of return for these entities for the year to September was 8.8 per cent, while their five-year average annualised rate of return was reported to be 4.8 per cent.
According to APRA, benefit payments increased by 21.8 per cent on an annual basis, driven by a 30 per cent jump in lump sum payments. Benefit payments totalled $29.2 billion for the quarter and $107.5 billion for the year.
Meanwhile, contributions totalled $42.3 billion during the quarter and rose by 12.5 per cent over the year to a total of $169.0 billion.
Employer contributions were $30.9 billion for the quarter and $126.3 billion for the year, which was 13.7 per cent higher than in the year ending in September 2022.
“This growth was due to the increase in Superannuation Guarantee (SG) rate to 11.0 per cent from 1 July 2023, and strong labour market outcomes,” APRA explained.
“Employment grew by 3.0 per cent over the past year and wages are estimated to have grown by 4 per cent, according to the wage price index.”
Super fund members contributed $11.3 billion during the quarter and $42.7 billion over the year, which was 9.0 per cent higher than the year ending in September 2022.
“The flow of member contributions in the September 2023 quarter was similar to the flow in the September 2022 quarter. Given the growth in employment and wages, this could suggest that cost-of-living pressures are leading members to scale back personal contribution to superannuation,” APRA noted.
APRA also reported that the total assets of super entities with more than six members fell by 0.2 per cent or $4.3 billion to $2.6 trillion during the quarter.
Of the $2.3 trillion in total investments, 53.3 per cent was in equities, including 21.9 per cent in Australian listed equities, 26.4 per cent in international listed equities, and 5.1 per cent in unlisted equities.
Fixed income accounted for 20.3 per cent of the total investments while cash investments accounted for 8.5 per cent. Property and infrastructure made up 15.6 per cent of the total while other assets, including hedge funds and commodities, accounted for 2.2 per cent.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.