Australia’s superannuation pot tips over $4 trillion

As the nation’s super funds battle back-office failures, the retirement pot continues to grow at pace and has now tipped over the $4 trillion mark.

Australia’s super savings are now above $4 trillion, with SMSFs controlling a quarter of the pot.

Australia’s retirement pot has tipped over the $4 trillion mark, boosted by higher inflows and positive market returns.

Total superannuation savings hit $4.1 trillion at the end of September, up more than 13 per cent on the prior quarter, according to new data from the Australian Prudential Regulation Authority.

It took just four years for the super system to add $1 trillion to the pot, with the sector hitting a combined $3 trillion in 2020.

Of the current $4 trillion in retirement savings, the majority is held by APRA-regulated super funds such as AustralianSuper, Australian Retirement Trust and Colonial First State. All up, APRA monitors about 100 of these funds.

As markets pushed higher between July and September, and funds saw the added boost of the super guarantee rate lifting to 11.5 per cent, APRA-regulated funds edged closer to managing $3 trillion of workers’ savings.

This segment now looks after $2.8 trillion of workers’ savings, recording 15 per cent growth in the 12 months to the end of September.

Self-managed funds, meanwhile, reached a fresh milestone, tipping over the $1 trillion mark for the first time. But their growth wasn’t as strong as the larger funds, with SMSFs seeing an 11 per cent lift in assets over the full year.

“Total contributions increased by 13.1 per cent to $191.3bn in the year ending in September 2024. Of this, employer contributions increased by 11.4 per cent over the year to $140.8bn. Member contributions increased by 18.1 per cent over the year to $50.5bn,” APRA said on Wednesday.

Benefit payments increased by 11.4 per cent to $119.9bn, while pension payments jumped a full 20 per cent to $54.8bn as more workers push in to retirement.

Super funds have recorded strong market gains over the past year, with the median growth fund — that’s 77 to 90 per cent invested in growth assets — returning 16 per cent over the 12 months to the end of September. The median balanced fund, which typically holds between 60 and 76 per cent in growth assets, returned 13 per cent over the same period, according to research house SuperRatings.

The industry built on these gains in October, adding a further 2 per cent to the one-year return by the end of the month.

Australia’s super pot reaching a fresh milestone comes right as the sector is under threat over a litany of scandals surrounding its back office functions. While super funds have long put the bulk of their attention on investment returns, the staggering size of the pot has led to apparent systemic weaknesses in administration functions.

Cbus, the $94bn super fund for the construction industry, has been at the centre of recent failures and is being sued by the Australian Securities & Investments Commission for its mishandling of $20m of death and disability claims. Some claimants waited a year or more before the fund processed their claims.

The blockbuster court case against Cbus puts fresh pressure on the fund right as it faces scrutiny over its appointment of CFMEU heavyweights Paddy Crumlin, Jason O’Mara and Lucy Weber to its board.

The move to appoint the union officials came after the militant union was investigated over alleged criminal links and despite the prudential regulator declaring it was “not yet satisfied” the fund had gone through the required licensing conditions, and suggested it may take further action.

Like Cbus, other funds, including the nation’s largest, the $340bn megafund AustralianSuper, have also been called out for failing to deal with claims in a timely manner.

ASIC commissioner Simone Constant earlier in the month warned big super CEOs the corporate cop would crack down on the $4 trillion sector over failures to track end-to-end claims handling times and “weak” ­practices.