The Australian Prudential Regulation Authority has come out with its Annual Superannuation Bulletin. It reports that the total assets held by superannuation funds has increased in value by $49.6 billion. This is an increase of 3.7% in twelve months (till June 30th) and the total value now stands at a whopping $1.4 trillion.

It has been said that since June last year, this value could have risen by up to 9% (the equity markets have risen by 15%) Super savers, including those on payroll put money into many assets. So the share price rise wouldn't have entirely benefited the superannuation pool. The second half of 2012 saw superannuation funds in Australia bounce back sharply. Most balanced funds returned around 12% compared to the negative returns that were seen in 2011.

How is the amount divided?

Of this mammoth amount, $833.6 billion is being held by superannuation entities regulated by the APRA. Self managed superannuation funds hold $439 billion. The Australian Tax Office regulates these. Of $127.9 billion that remains, most is held by superannuation schemes in the public sector ($85.7 billion). These are the defined benefit schemes.

There was a growth of 8% in the number of SMSFs (super funds that are self managed). Their number was 478,263 during 2011-2012 and they saw an 3.7% increase in their asset size.

Fund wise division

There are many SMSFs, so the APRA does not give out average performance numbers for them. The ten year rate of return (ROR) performance has been released and it contains some reassuring numbers. The annual average returns are as follows: retail funds- 3.4%, large funds- 4.4%, funds catering to corporate pensions- 4.8%, industry funds- 5.1%, public sector funds- 5.5%.

Since retail funds have a greater equity exposure, they performed better in the second half. Industry funds have a more mobile demographic membership, therefore they cannot have as much exposure to infrastructure investments (that are illiquid) as they could.

Of the superannuation funds regulated by the APRA, balanced funds hold about about 80%. These carry growth assets to the extent of 70%, either in the form of property or equities.

The future for superannuation funds

It has been said that the superannuation pool in Australia will register (on an average), a growth rate of 9.1% annually in next ten years. By June 2022, it is expected to grow to $3.2 trillion. Superannuation guarantees (compulsory contributions to superannuation funds by employers, on their employees behalf) have increased and will continue to rise from the current 9% to over 12% till 2019-2020. Many corporate payroll services handle disbursements to superannuation funds.