Insights from APRA's 2022/23 superannuation bulletin

At the end of January, APRA released the annual superannuation bulletin for 2022/23 financial year. You have probably seen the headlines—$3.6 trillion total assets under management on 30 June 2023, which represents 140% of GDP. At the same time, the total value of the ASX was $2.5 trillion. It was only 12 years ago that both the total superannuation assets and the value of the ASX were both $1.3 trillion.

Here are a few of my observations...

Profit For Member funds have half the assets

The proportion of assets owned by industry superannuation funds continues to grow, now representing 34% of total assets (up from 24% five years ago). Profit for member funds (industry funds, corporate funds and public sector funds) now represent over half of all superannuation assets.

Retail funds are the big losers, with their share of assets falling to just 21% of the total. SMSFs make up the other 25%, which has been pretty consistent for the past five years.

Consolidation continues

No surprises here. On 30 June 2023, there were 78 APRA-regulated RSE licensees, half the number of two decades ago. Only 29 of these RSE licencees are classified as For Profit.

In the same time period, the number of superannuation entities has fallen from 2,279 to just 128. Several mergers have already been completed since 30 June 2023, and a number are scheduled to be completed before the end of 2024.

Multiple account initiatives are working

Superannuation administrators have always been under fee pressure from their clients, the trustees. Industry consolidation is hitting these businesses hard. Unless both merging funds are with the same administrator, there will be a loser.

Making matters worse, many administration contracts are based on the number of accounts. In June 2009, there were 1? superannuation accounts for every Australian. Not Australians of working age but every Australian.

Successive Federal Governments have introduced a range of measures to tackle the problem of multiple accounts. And they seem to be working. The number of accounts has fallen by 25%. Good news for members who are no longer paying unnecessary fees for multiple accounts. Not so good news for funds and administrators who rely on account based fees for their income.

#Superannuation #NotSuperYet

The Government, the regulators and the superannuation industry are finally realising that they have been neglecting the needs of Australians transitioning to life after full-time work. We have a pretty good accumulation system powered by compulsory contributions. We have a long way to go to complete the job. #Superannuation is #NotSuperYet

The proportion of members aged over 65 has increased from 8% to 13% in the last five years. The ABS reported last December that 670,000 people intend to retire in the next 5 years, with?220,000 in the next 2 years.

The Retirement Income Covenant is a good start. The Government's discussion paper seeking community and industry views on how the superannuation system can best provide the security and income Australians need as they live longer and healthier lives in retirement is also an important step forward.

As Andrew Gale and I wrote in our recent Dialogue Paper, Retirement Matters, for the Actuaries Institute , the time for Australia to reimagine retirement is now.?