‘Stunning’ superannuation results for 12-month period: analyst

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Could Australia’s superannuation system be coping with the COVID-19 crisis better than many predicted? That view appears to be supported by new figures from the financial watchdog.

According to the latest quarterly report released by the Australian Prudential Regulation Authority (APRA), while the savings pool did contract 7.7 per cent between December 2019 and March 2020, the sector saw an overall decrease of just 0.3 per cent in the 12 months to 30 April 2020.

This result may be also be attributed to 2019 being one of the best years ever for superannuation savings in Australia.

“Compared to the 23 per cent fall in global stock markets in the first quarter of 2020, as well as the 14 per cent fall over the 12-month period to March, this is a stunning result,” said Alex Dunnin, executive director of research and compliance at Rainmaker Information.

Australia’s superannuation savings have fallen only to March 2019 levels.

The retail super fund sector was hardest hit, contracting by up to 12 per cent in the March quarter. Self-managed super funds (SMSFs) contracted by 9 per cent in the same period.

But the not for profit (NFP) super fund sector comprising corporate, public sector and industry super funds, contracted only 5 per cent

“Two-thirds of the decrease experienced across the superannuation savings pool came from APRA-regulated NFP and retail funds,” Mr Dunnin said.

“While the retail super segment holds roughly one-quarter of superannuation savings assets compared to the NFP segment that holds half, each segment fell by about the same amount in dollar terms.

“APRA figures show the retail super fund segment holds 24 per cent of their investments in Australian equities, compared to just 15 per cent by NFP funds.”

Retail funds are more vulnerable to fluctuations in equities markets. On the other hand, industry super funds with a larger share of their investments in unlisted assets such as real property, infrastructure and private equity are generally better insulated from the worst of these equities falls, Mr Dunnin added.

Super funds held $273 billion in cash at the end of March, alleviating concerns that liquidity levels would be adversely affected by special coronavirus early release claims. About 1.63 million Australians have drawn more than $12 billion from their accounts.

“The 14 per cent held in cash and the 22 per cent held in bonds means super funds have $739 billion or 36 per cent of their total investments held in liquid assets,” Mr Dunnin said.

“NFP funds have 37 per cent of their assets available in cash and bonds, marginally exceeding the 36 per cent held by retail super funds. Industry funds hold 31 per cent of their assets in these instruments.”

For those who have withdrawn money from their super, the ABC has advice on how to take advantage of ‘co-contributions’.

“In layman’s terms, if you make a voluntary deposit into your super, the federal government will also tip some money in as a show of support for low- to middle-income earners.

“In Australia, a low- to middle-income earner is defined as someone who earns less than $54,837 in the 2020–21 financial year.”

So, if you’ve already withdrawn $10,000 from your super (or are planning to take that out), and if you put $1000 back into your account before the end of June, the  government will then make a co-contribution to your super account of $500.

Then, if you reduce your weekly budget by $20 per week and contribute the money you save (about $1040 annually) into your super, and if you do that for six years, the federal government continues to make its co-contribution and you’ll have your $10,000 back. However, you will have missed out on compound interest.

Are you surprised by the APRA figures for super?

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Written by Will Brodie

21 Comments

Total Comments: 21
  1. 0
    0

    What is more “stunning” is the fact that industry commentators don’t point out that it’s the advisors who got it wrong.

  2. 0
    0

    – 12 per cent in the March quarter ?? Surely that is to be expected eh?

  3. 0
    0

    If your super is taxed in any way, it is 1st July to 30th June that counts, not any other 12 month period. If they had used the period February 2019 to February 2020 we would have shown a remarkable increase with our funds

  4. 0
    0

    Well I have all but fully recovered from the first quarter downturn.

    I tried to add an image of the investment graph to prove it but for some reason this system won’t let me!

  5. 0
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    Not too sure whose SMSF contracted by 9% from what I have seen. These stats have certainly been worked to show industry funds as performing better than the other 2. From my results I certainly would not be happy with a 0.03% fall.

  6. 0
    0

    “Are you surprised by the APRA figures for super?”

    We are surprised as all of the media has programmed us to get ready to lose 15%+ of our investment. Maybe some have lost money as an average will include losses and gains to arrive at the required figure.

    We all have choices in life and we’re happy with the way our super has turned the corner since the announcement of the pandemic. Maybe others who have chosen a different way to invest their super are doing better or worse than we are but that’s none of my business. The government’s decision to halve the minimum drawdown has certainly helped us.

    • 0
      0

      I just wish one could put more into super no matter what their age.

    • 0
      0

      Retiring well – I totally agree with you. I find it discriminatory that just because you don’t have a job, you are not permitted to add to your super. It simply does not make sense.

      On one hand, the government wants people to put money away and save to support their own retirement, but refuse to let people who want to do this, do so. Especially those with minimal current super. Yes there needs to be some limits and safeguards to stop people putting millions into super, but with both the Tax Department and Centrelink so intertwined, this could easily be monitored.

      In my own instance, I am single, own my own home, no longer able to work, but am happy living frugally. I only have less than $100k in super. I do the occasional dog and babysit for neighbors, I love finding items to do up, and on-sell, and put my coins into a tin every day. It is nothing for me to have $2500 every 6 months. I have dropped my mandatory super withdrawal to 2.5% for this year, and next, and would love to be able to add any extra funds into super. Rather than put in the bank earning a pittance. My super lost a small amount over the past few months, but has regained more than half, and I don’t panic about ups and downs.

      Just wish the govt would consider letting seniors add to their super, no matter their status.

    • 0
      0

      You can invest the money yourself in funds the same as super but outside super. I invest in all sorts of things myself and just love the current share market. I work out what people are buying and follow the money with my investments.

  7. 0
    0

    Most of the SMSFs are administrated by the ATO and only report annually so I have no idea where APRA got it figures from. I have not sent in any records on my SMSF since 30th June 2019.

  8. 0
    0

    I got a digital balance check on my Super. The balance fell but it appears to rising slowly

    • 0
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      My Industy Fund had regained 80% of what it lost the last time I checked it a month ago.
      The only people who lost were those who panicked and moved to cash, they locked in an otherwise tempirary paper loss.

    • 0
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      I’m selling down now to take profits and lighten my equity exposure. I have been buying since the bottom.

  9. 0
    0

    Long way to go yet my balanced account with hostplus was $500k end of December down to $435k mid April up to $456k yesterday

  10. 0
    0

    I feel OK with my super “Aussie Super” It went down a lot at the start of the virus, but has now bounced back a lot. Not too much we can do. Hey?????

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