Superannuation assets top $3 trillion for first time

The nation’s giant pool of super savings has passed $3 trillion despite a market crash and a wave of early withdrawals.

It’s been a difficult year for super.

Australia’s total superannuation assets have now passed $3 trillion, as the nation’s giant pool of savings grows steadily despite a wave of withdrawals throughout 2020.

Data from the prudential regulator show the 2.2 per cent climb in national savings between December 2019 and 2020 took total superannuation assets to $3.04 trillion by the year’s end.

Almost $12bn was added in MySuper products total assets, on the back of increased scrutiny by the Australian Prudential Regulatory Authority.

APRA’s MySuper heatmaps have been used to name and shame poorly performing superannuation funds, while also lauding those who meet and beat benchmarks set by the regulator.

But overall growth in super was not reflected in the self-managed fund space, which fell flat despite growth across other funds.

A large proportion of self-managed super funds is held in cash, which was hard hit by the ultra-low interest rates imposed by central banks in the wake of the COVID-19 pandemic.

Total superannuation contributions grew 1.9 per cent for the year, but this was heavily impacted by a collapse in annual member contributions.

Annual member contributions of $22.9bn were 6.4 per cent lower than the previous year

But employer contributions grew, adding 4.1 per cent for the year.

The broader restructuring of the balance of life office statutory fund in the June quarter also saw assets pumped up by 7.1 per cent to close the year at more than $60.4bn.

Superannuation Minister Senator Jane Hume welcomed the all-time high for superannuation, noting it came amid a broader expansion of the MySuper product.

“The data confirming Australians’ superannuation balances reached a record high in 2020 is a clear indicator of the resilience of our superannuation system,” she said.

“However, as we’ve said countless times, our system is not perfect. High fees, persistently underperforming funds and too many duplicate accounts are a drag on the system”

Superannuation funds were under pressure all through 2020 as a sharemarket crash in March was followed by more than $36b.4bn in early superannuation withdrawals.

Net contribution flows collapsed from $40bn in 2019 in the face of a massive outflow from superannuation funds caused by the early access scheme.

This saw 2020 close with only $7bn in net contributions.

The outpouring from accounts saw total benefit payments jump 39.4 per cent for the year.

Total benefit payments for superannuation in 2020 totalled more than $113.3bn.

Despite the unprecedented conditions in superannuation markets SuperRatings has reported a rapid resurgence in fund performance thanks to massive market support from central banks.

By February super funds had notched up 11 months straight of gains, bouncing back from the bottom of the pandemic.

SuperRatings said current trends indicate the superannuation market is well positioned for 2021.

Originally published as Superannuation assets top $3 trillion for first time