Australia’s superannuation system is doing more than funding retirements – it’s quietly fuelling the nation’s productivity, lifting GDP, and adding thousands to workers’ pay packets, according to new analysis from ASFA.
In a report released on Monday ahead of the federal government’s Economic Reform Roundtable, the Association of Superannuation Funds of Australia (ASFA) said that super has become a central pillar in the country’s economic infrastructure, with its investment firepower responsible for a 2 per cent boost in GDP and productivity, equivalent to around $2,500 in additional annual earnings for the average full-time worker.
“Investment from the superannuation sector is fundamental to lifting improvements in productivity,” said ASFA CEO Mary Delahunty.
“Super funds deploy around half a million dollars in new financial capital every day on behalf of members. When businesses harness this capital effectively, it delivers both economic dividends and generational progress. But there is more Australia can do.”
The report, The Impact and Opportunity of Superannuation on Australia’s Productivity, quantifies for the first time the national productivity dividend attributable to the super system’s investment in capital stock – from toll roads and clean energy infrastructure to venture capital and digital innovation.
ASFA estimated that compulsory superannuation has added $1 trillion in additional household savings since 1992 and currently lays claim to a quarter of Australia’s capital stock when self-managed super funds (SMSFs) are included.
The findings come amid mounting concern about Australia’s stagnating productivity growth, with ASFA’s research suggesting policymakers are overlooking a uniquely Australian asset that could be more strategically harnessed.
“The productivity conversation must dare to go beyond the ‘bosses versus workers’ narrative which risks anchoring the outcomes to ‘ways of working’ and misses the opportunity to consider the role of capital to deliver a national vision,” said ASFA’s Delahunty.
“The productivity challenge is not unique to Australia, but Australia has a unique national asset that gives us a head start in tackling it – our multi-trillion dollar superannuation system. Ensuring we have the right settings will allow this capital to reap dividends for all Australians.”
Currently, institutional super funds hold approximately $1.4 trillion in Australian-domiciled investments – equivalent to 14 per cent of national capital stock. When SMSFs are included, this climbs to 25 per cent.
Much of this is directed to listed equities (47 per cent), bonds (26 per cent), unlisted infrastructure (7 per cent), unlisted property (6 per cent), and increasingly, private equity (3 per cent) and private debt (1 per cent).
Beyond supporting traditional capital formation, the system is also the largest domestic investor in Australian venture capital, channelling funds into early-stage technologies and innovation, key drivers of future productivity.
However, ASFA warned that the super system’s ability to continue playing this role is being held back by outdated and misaligned regulatory settings. In fact, the report puts forward a series of reforms aimed at ensuring super can remain a driver of long-term productivity and economic transformation.
Among its recommendations, ASFA calls for codified policy stability for long-term investment vehicles to reduce regulatory volatility; reforming performance benchmarks to encourage investment in sectors such as clean energy and advanced manufacturing; and removing stamp duty from transaction cost disclosures under ASIC’s RG 97 to improve the competitiveness of residential property investment.
It also proposes streamlined pathways for public-private co-ordination on nationally significant projects, especially in the energy transition, and the modernisation of capital gains tax rules to enable funds to restructure holdings without triggering tax events.
ASFA is also backing the creation of a productivity-focused working group within the Treasurer’s Investor Roundtable to keep reform momentum on track.
Looking ahead, ASFA noted that Australia’s superannuation system is poised to become an even more powerful economic force, with assets projected to expand steadily in the coming decades.
While the trajectory will depend on variables such as employment growth, wages, and investment returns, Deloitte forecasts the total pool will climb to $11.2 trillion by 2043, nearly double today’s share of GDP, rising from around 150 per cent to almost 200 per cent.
ASFA said that this growth would translate into a rising flow of financial capital requiring productive allocation, citing data showing that, on average, institutional superannuation funds must deploy approximately $40 billion in new financial capital into investments each quarter.
“Given the rising magnitude of future (potential) funding from the superannuation sector for the Australian economy, the manner by which this funding is allocated will be a key determinant of Australia’s future productivity performance,” the association concluded.
