17th Jan 2014
Superannuation spending concerns
Superannuation spending concerns
Image credit: Shutterstock

The Australian Prudential Authority (APRA) released its annual superannuation statistics earlier this month. APRA’s analysis uses statistics from Australia’s 200 largest superannuation funds for the financial year July 2012 to June 2013. It looks at the best and worst performing superannuation funds, as well as consumer behaviour. 

The results reveal a huge disparity between the best and worst performing funds. The corporate superannuation fund Goldman Sachs & JBWere was the best performing superfund both overall and in 2013, offering its members a 10-year average annual return of 10.1 per cent, which spiked at 24.9 per cent in 2013. The worst was the Progress Super Fund, a fund for bookies, which saw a 10-year average annual return of just 0.1 per cent.

It was promising that 2013 saw the highest average returns across the board since before the global financial crisis (GFC).

Because an increasing number of baby boomers began to draw down their super last year the report shows that super payouts in Australia had hit a record high of $75 billion. There is concern that, although baby boomers are reputed to be wealthy and living well, many are withdrawing more from their superfunds year-on-year than is sustainable throughout retirement. Without more conservative management, it is possible many baby boomers will not have enough to fund the later years of their retirements.

There has also been some concern that retirees with Self-Managed Super Funds (SMSFs) are investing recklessly in property. The SMSF Professionals’ Association of Australia chief executive Andrea Slattery has refuted these claims, stating there is no evidence of reckless behaviour. 

“Where we do strongly disagree is the inference by the regulators, and other critics of the sector, that many SMSF trustees are listening to the siren call of the property spruikers and gearing up to rush headlong into unsuitable residential property markets.”

Ms Slattery cited statistics to support her point of view, stating that “residential property makes up just 3.4 per cent of all SMSF assets”.

It should, however, be noted that when commercial property is added to the equation, property as a whole makes up 15 per cent of all SMSF assets, and that amount continues to grow.

Almost a third of all money invested in superannuation is held in SMSFs. Of those who manage an SMSF, 76 per cent are aged 50 and over. In other funds over 50s make up just 26 per cent of the whole. The Reserve Bank is concerned that the increase in property investment by SMSFs could potentially drive property prices to an unhealthy level, a symptom many Australian cities may already be experiencing.

Although 2013 showed the highest average superannuation returns since the GFC, the concern about baby boomers and their long-term retirement savings is shaping up as a critical issue for policy makers, retirees, and potential homebuyers alike.

You can read the full report at the APRA website.

Or find out more about SMSFs and property investment at the ABC News website.


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