Retirement
‘Stunning result’ for super despite COVID-19 battering
Australia’s superannuation savings pool is coping well despite the pandemic’s impact on market volatility, it has been revealed.
‘Stunning result’ for super despite COVID-19 battering
Australia’s superannuation savings pool is coping well despite the pandemic’s impact on market volatility, it has been revealed.
The Australian Prudential Regulation Authority (APRA) has highlighted that just 0.3 per cent of the value of Australian superannuation has been lost in the 12 months to 30 April 2020.
In the latest quarterly industry snapshot, APRA was able to show that while the savings pool did contract 7.7 per cent between December 2019 and March 2020, over the 12-month period to the end of April 2020, it saw an overall decrease of just 0.3 per cent.
This has been credited to 2019 being one of the best years ever for superannuation savings in Australia.
According to Rainmaker Information, which analysed the data, it should give Australians 12 million super fund members and their families confidence that while superannuation has been buffeted by COVID-19, their super savings remain safe.
Alex Dunnin, the executive director of research and compliance at Rainmaker Information, has called it a “stunning result”.
It means Australia’s superannuation fund savings remain at the level they reached in March 2019, which contrasts strongly with the fallout from the GFC, where super funds saw savings drop by around 20 per cent.
But according to Rainmaker, not all parts of the superannuation sector are weathering the crisis equally.
A contraction of just 5 per cent was seen across the not for profit (NFP) super fund segment comprising corporate, public sector and industry super funds in the March quarter.
The retail super fund sector loss was more than twice as much, at up to 12 per cent, while self-managed super funds (SMSFs) contracted 9 per cent.
Mr Dunnin flagged that “two-thirds of the decrease experienced across the superannuation savings pool came from APRA-regulated NFP and retail funds”.
“APRA figures show the retail super fund segment holds 24 per cent of their investments in Australian equities, compared to just 15 per cent by NFP funds,” he explained.
As a result, retail funds are more vulnerable to fluctuations in equities markets. However, Mr Dunnin did concede that industry super funds with a larger share of their investments in unlisted assets such as real property, infrastructure and private equity were better insulated from the worst of the equities falls.
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