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Super contribution lag could point to SMSF growth
Weak growth in total superannuation contributions could be the result of leakage from Australian Prudential Regulation Authority (APRA)-regulated funds to the self-managed sector and deteriorating economic fundamentals, according to the Financial Services Council (FSC).
A 1.9 per cent growth rate in contributions for the 2012/13 financial year to APRA-regulated funds could be caused by rising unemployment and slower GDP growth, the FSC's latest Bond Report has found.
FSC chief economist James Bond said the rise of self-managed super funds (SMSFs) among high net worths could also be a factor in lower contributions growth driven by a significant drop in employer contributions.
It found total contributions for the June quarter were $112 million (0.4 per cent) less than June 2012, following a decline of $399 million between the March and June quarters.
June saw the lowest levels of employer contributions since the global financial crisis, which added to a $489 million drop between June 2012 and June 2013 (2.4 per cent) and overshadowed a 6.6 per cent increase in employee contributions to $377 million for the year.
"Weak growth in September 2012 and March 2013 have combined with the decline in this quarter to result in weak growth of 1.9 per cent for the last financial year," said Bond.
"Rising unemployment and slowing GDP growth could be the reasons why people are holding back salary sacrificed contributions to their superannuation funds."
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