Australia's pool of retirement savings has overtaken the total value of Australian bank deposits, after superannuation assets swelled to $1.62 trillion in the year to June.
Superannuation assets soared by $217 billion, or 15.5 per cent, last financial year as a result of a buoyant sharemarket and growing member contributions, figures from the financial regulator show.
The surge means the super pool now exceeds the $1.6 trillion that households, businesses and others have on deposit in the banking system, an amount that grew by 6 per cent over the financial year.
It comes after a sharemarket rally helped funds post their best returns in 16 years, but it is also a reflection of super's meteoric rise as the main vehicle for household saving. With its concessional tax treatment, super has established itself as the primary way for people to save for their retirement, creating an enormous pool of money that is projected to expand by trillions more in the coming decades.
The head of research at Rainmaker, Alex Dunnin, said super's rise was a critical long-term change in the economy, with super poised to play a growing role as the home of savings, and therefore source of funding for investment.
"It really is a changing of the guard," Mr Dunnin said. "The economic power is shifting from the traditional banking sector to the owners of the capital and the investors."
At June 30 self-managed funds held the largest share of super assets, with 31.3 per cent of the total, the Australian Prudential Regulation Authority said.
The next biggest segment was the 26.1 per cent share held by retail funds, which are controlled mainly by the big banks and industry giant AMP.
The increase comes after mandatory super contributions were raised in July from 9 per cent of wages to 9.25 per cent, the first step in a plan to increase the super guarantee to 12 per cent by the end of the decade.
Treasury has projected the value of super will hit $6 trillion within 24 years, and given such growth, it is tipped to play a key role in future economic policy debates, including the review of the financial system promised by the Coalition if it wins the election.
Australian Bankers' Association chief executive Steven Munchenberg said super's overtaking of bank deposits highlighted the different taxation treatment.
While super contributions and withdrawals during retirement are taxed concessionally, income from bank deposits held outside the super system attracts the marginal tax rate.
"We are not unhappy with the way super is treated for tax purposes, but it does create an unlevel playing field," he said.
Banks continue to say they are paying much more for deposits than in the past due to regulations designed to make them safer.
Echoing concerns of senior bankers, Mr Munchenberg said these pressures on deposit costs could cause banks to face a funding squeeze if there was a sharp increase in demand for credit.
"If there are reasons and incentives for people to be putting money into something other than bank deposits, that's going to make it harder for banks to attract that funding ... which potentially becomes a problem if demand for credit from businesses and households were to increase," he said.