Industry fund assets closing in on SMSFs, pull away from retail funds

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Industry super funds continue to pull ahead of retail funds in terms of assets, and are closing in on SMSFs.

Industry super fund assets grew by 13.83% during 2018/19, according to the latest APRA statistics. Retail funds were up a slight 0.51%. SMSFs grew by 1.66% and corporate funds were up 10.50%.

A large proportion of the gains by industry funds in the second half of the year came from investment returns. However the change in assets is not just based on investments, but also contributions coming in and benefits paid out, in addition to rollovers. Though industry funds did have higher total investment income than retail funds, and with lower expenses.

Industry funds received over $16.5 billion more in Super Guarantee contributions than retail funds during the 2018/19 year. Meanwhile retail funds lost almost $31.8 billion to net benefit transfers (rollovers in less rollovers out), whereas industry funds gained $17.135 billion. Retail funds paid more in benefit payments (lump sums and pensions), down $30.223 billion for the year compared to $17.593 billion for industry funds.

Assets in industry funds first exceeded retail funds during the June 2018 quarter, and since then retail funds have been relatively stable while industry funds continued to grow.

The Financial Services Royal Commission held its first public hearing in March 2018, held hearings into superannuation in August 2018, and the final report was released in February 2019. Industry funds emerged from the Royal Commission in better shape than retail funds. It is unclear to what extent a response to the Royal Commission is reflected in the statistics, though Industry Super Australia has claimed there was a “wave” of people turning their backs on retail funds in favour of industry funds.

Rollovers out of retail funds, and into industry funds, grew during the year – and there was a spike in money taken out of retail funds in the last quarter of the year.

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