POWERED BY MOMENTUM MEDIA
How super early access has staunched the SG rivers of gold
The superannuation funds worst hit by the Government’s hardship early release scheme have seen declines of between a quarter and a half in their growth in funds under management (FUM).
Analysis of the Australian Prudential Regulation Authority (APRA’s) latest data shows that for some of the worst-hit funds, the early release outflows combined with job losses amongst their members have significantly offset the benefit of their superannuation guarantee (SG) inflows – something which is likely to impact on APRA’s future heatmap analyses.
The latest APRA data relating to one of the most-affected funds, HostPlus reveals the fund has paid a total of $2,542,472,958 in both initial and repeat early access applications with its latest annual report (2019) stating that it had $44 billion in FUM – an increase of $11 billion over the previous financial year.
Thus, for Hostplus the amount so far taken in early release superannuation represents nearly 23% of the amount by which it increased its FUM in what represented a normal year.
Similarly, for REST the fund has so far seen $2,651,914,716 withdrawn as a result of the early release regime in circumstances where its latest annual report (2019) showed it had $56 billion in funds under management up from $51.6 billion the previous year – meaning the early release drawdown had also significantly hit its FUM growth.
For HESTA, $1,420,436,488 was taken in hardship early release withdrawals which given its FUM of $50 billion which increased by 13% over the prior financial year, the situation was less significant.
APRA has consistently pointed to 10 big funds having been most affected by the early release regime – AustralianSuper, REST, HostPlus, Cbus, Sunsuper, BT, HESTA, MLC, CFS and AMP.
The data analysis around the manner in which early release is eroding annual growth in FUM has come at the same time as superannuation fund executives have confirmed that while there was a significant spike generated by the 1 July start to the second tranche of the early release regime, this had now significantly tapered.
They said that they expected that more moderate numbers of early access requests were now expected, not least because the Government had extended the early release regime until the end of December.
“I believe a lot of people no longer feel pressured and will wait to see how economic events play out before deciding whether to use the early access option,” one executive said.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
