Super balances hit by market headwinds

The Australian Prudential Regulation Authority (APRA) has published its Quarterly Superannuation Performance data, reporting a 3% year-on-year decline in the total value of superannuation assets to $3.4 trillion, down from $3.5 trillion.

The value of APRA-regulated assets fell 2.9%, from $2.36 trillion to $2.3 trillion, with assets in MySuper products declining 3.1% from $946.8 million to $917.3 billion.

APRA also reported a contraction in the total value of assets managed by self-managed super funds (SMSFs), down 2.4% from $901.8 billion to $880.6 billion.

Exempt public sector superannuation schemes experienced the sharpest contraction, plunging 6.8%, from $166.6 billion to $155.2 billion.

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APRA said the broad-scale contraction in the value of super assets was a reflection of “volatility in financial markets” off the back of aggressive monetary policy tightening from the Reserve Bank of Australia (RBA) and its peers around the world, aimed at curbing inflation. 

Subdued market-driven asset growth was offset by an 11% increase in super contributions, which totalled $154.4 billion over the year.

Employer contributions increased 11.8% to $114.9 billion over the same period., which APRA noted was supported by the increase to the Superannuation Guarantee to 10.5 per cent per annum from 1 July 2022 and record-low unemployment.

Member contributions also increased, albeit less pronounced, up by 8.6% over the year to $39.5 billion.

As at 31 December 2022, benefit payments totalled $91.6 billion, representing an increase of 11.3% from the previous corresponding period.

Lump sum payments totalled $50.2 billion (up 17.6%) and pension payments totalled $41.3 billion (up 4.5%).

According to APRA, both increases were “in-line with longer term trends” as a result of a “maturing superannuation system and ageing population”.