Big bounce in discretionary super payments
As global sharemarkets took off in the last three months of 2012, the total value of funds flowing into superannuation was $21.6 billion, an increase of 10 per cent from the much weaker September quarter, figures from the Financial Services Council show.
Of this increase, $3.6 billion came from voluntary contributions by members - up 13 per cent on a year earlier.
FSC chief economist James Bond, who prepared the analysis using figures from the financial regulator, said this was the first time members' discretionary contributions into super had increased since September 2011.
Mr Bond said the bounce was probably a result of higher confidence among households and a run of better performance on financial markets.
"We had growth in equities last year and we had a year of good returns for superannuation funds. Combined with an absence of bad news from Europe and the US, this appears to have given people more confidence."
The typical super fund posted an 11.7 per cent gain last calendar year and the growth continued with a further 2.6 per cent rise in January, according to figures from SuperRatings.
The rise in voluntary contributions comes after $117.5 billion was poured into super in 2011-12, the second-highest yearly inflow on record.
However, the latest increase is significant because until now, the rebound has been driven by employer contributions, which are mostly mandatory, rather than households voluntarily putting more into super.
Despite the quarterly bounce, over the year voluntary contributions fell slightly and Mr Bond said market conditions were too fragile to predict a sustained rise in super contributions.
While the rise is welcome news for the funds management industry, which has been squeezed by greater caution among consumers, Mr Bond also said the growth was still much slower than before the global financial crisis.
Mr Bond's analysis is based on figures on the $1.4 trillion superannuation industry provided by the Australian Prudential Regulation Authority.
Frequently Asked Questions about this Article…
Households increased their voluntary superannuation contributions by $3.6 billion in the December quarter, marking the first rise in members' discretionary contributions since September 2011, according to analysis from the Financial Services Council (FSC).
Total funds flowing into superannuation were $21.6 billion in the December quarter, a 10% increase from the much weaker September quarter, based on FSC figures drawn from the financial regulator.
FSC chief economist James Bond said the bounce was likely due to higher household confidence and better performance in financial markets—growth in equities and an absence of major negative news from Europe and the US appeared to boost people’s willingness to top up retirement savings.
Yes. According to SuperRatings, the typical super fund posted an 11.7% gain for the last calendar year and then recorded a further 2.6% rise in January, which likely supported increased voluntary contributions.
While much of the overall rebound had been driven by employer contributions (mostly mandatory), the December-quarter rise was notable because it included a clear increase in voluntary contributions from households.
Not necessarily. Despite the quarterly bounce, voluntary contributions fell slightly over the year, and James Bond warned market conditions remained too fragile to predict a sustained rise in voluntary super contributions.
The rise is welcome for the funds management sector, which had been squeezed by greater consumer caution, but FSC analysis noted that overall growth in contributions is still much slower than before the global financial crisis.
The FSC analysis used figures from the financial regulator (APRA) covering Australia’s $1.4 trillion superannuation industry. The article also cites SuperRatings for typical fund returns and notes that $117.5 billion was contributed to super in 2011–12, the second-highest yearly inflow on record.
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