Total contributions to superannuation in the year to September 30, 2016, fell 1.1 per cent compared with the previous year, a joint report from the Financial Services Council and UBS Asset Management has stated.
There was a reduction of 1.5 per cent in member contributions but an increase of 0.3 per cent from employers partially offset it, the State of the Industry 2017 report, which was released this week, showed.
“We would point to the fact that the constant discussion and changing of the rules in super would lead people to be disengaged and, frankly, to look for other ways to invest their money,” UBS Asset Management head of Australia and New Zealand, Bryce Doherty, said.
In the year to September 2015, members contributed $24.16 billion to superannuation; by September 2016, the yearly total had dropped to $20.32 billion, the report stated.
This coincided with a raft of policy changes to superannuation from the Turnbull Government, including lowering the annual concessionary cap to $25,000 and the non-concessional cap to $100,000.
Bryce argued that the reduction in concessional caps and the limits on non-concessional contributions would only exacerbate the gender imbalance in superannuation outcomes, as there was “less flexibility” to tackle the issue.
Financial Services Council chief executive Sally Loane was also critical of the constant tinkering with policy. She said super should be taken out of the budget cycle and instead be linked to the five-yearly Intergenerational Report.
Slight uptick in Australian listed shares
Another finding from the State of the Industry 2017 report was that super funds’ allocation to Australian listed shares had increased slightly for the first time in four years.
Out of the $1.3 trillion in the roughly 200 super funds the Australian Prudential Regulation Authority (APRA) oversees, 22.9 per cent was invested in Australian shares at September 2016.
Previously, allocations to the asset class had been steadily falling, from 24.5 per cent at September 2013 to 24.0 per cent at September 2014 to 22.4 per cent at September 2015.
Over the same period, allocations to international shares had been increasing, but they have now levelled off at 21.8 per cent.
The report added that about 37 per cent of total APRA-regulated super fund assets – or $492.2 billion – were in a MySuper product.
Within these default funds, allocations to international shares have continued to increase, from 26.0 per cent at September 2015 to 26.7 per cent at September 2016. The uptick in Australian listed shares was also evident, with an increase from 20.4 per cent at September 2015 to 21.1 per cent at September 2016.
The Australian sharemarket experienced increased volatility at the start of 2016, compounded by the geopolitical upset of the Brexit vote midway through the year.
The data used in the report extends only to September. Since that time, allocations have probably changed as a result of the bump in markets following the election of US President Donald Trump. In the US, the Dow Jones Industrial Average is near a record high, following a 12-day winning streak that concluded when the market dipped slightly on Tuesday.