At least two Australian superfunds could be worth over $1 trillion by 2040, according to KPMG.
In its annual Super Insights review of the local sector, the firm has named AustralianSuper and Australian Retirement Trust (ART) – both of which have quintupled since 2021 from $200 billion – as the two funds first to reach the trillion mark.
According to KPMG research, using the latest available data from APRA and ATO, the total value of funds increased from $2.4 trillion to $2.8 trillion in the 12 months ended June 30, 2021 .
However, there was a reported 5 percent drop in membership (from 22 million to 20.8) due to the closure of eligible rollover funds in the first phase and the impact of early release payments from the pension fund.
Despite this, member contribution rates increased 13 percent and employer contributions increased 8 percent, with retail super funds having the largest impact (44 percent), followed by industry funds (19 percent).
The average balance of all funds (excluding SMSFs) was $93,165, ranging from an average of $75,397 in the industrial funds sector to $226,714 in corporate funds. Meanwhile, the average net cash flow ratio across funds rose to 1.4 percent from 1.13 percent, and the number of funds with net outflows fell from 50 from 83 in 2019/20 to 38 from 75 in 2020/21.
KPMG National Sector Leader, Asset and Wealth Management, Linda Elkins, said the report highlights the need for the sector to shift its focus from the savings phase to the pension system.
“The ‘Your Future, Your Super’ legislation – specifically the stapling and annual proficiency test – will continue to put pressure on a segment of the sector and lead to further consolidation while surviving funds must look forward to meeting their current and future membership needs cover,” said Ms Elkins.
“In the context of inflows no longer being driven by standard arrangements, maintaining size will be about attracting and retaining members. With approximately 20 percent of total member benefits currently in the retirement phase, the requirements of the Retirement Incomes Covenant formalize the need for funds to develop strategies and products for members approaching and reaching retirement.
“These must be provided in the context of increased regulatory scrutiny and the overarching requirement to act in the best financial interests of members. To be successful, funds need to improve their access to data for identification and analytics.”
Neil is deputy editor of wealth publications including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.