AUSTRALIANS ARE opening more superannuation accounts than ever before, as the widely anticipated impact of last year’s choice of fund has apparently failed to materialise
AUSTRALIANS ARE opening more superannuation accounts than ever before, as the widely anticipated impact of last year’s choice of fund has apparently failed to materialise.
According to the Australian Prudential Regulation Authority’s (APRA) latest edition of the Annual Superannuation Bulletin,the number of super accounts is growing at a rate of one million every year, creating not only high administrative costs but also complications as people struggle to keep track of their super savings.
Currently there are nearly 30 million super accounts in Australia and the average super fund member still holds multiple accounts, despite efforts by the Federal Government to encourage people to streamline their retirement nest eggs.
The number of super entities or funds is also growing. APRA found that these increased by 6.9 per cent, during the year to 30 June 2005, to 311,000.
Corporate funds had the largest number of players with 963 entities handling 797,000 member accounts and $52.5 billion in assets. By comparison, retail funds had 226 entities with 14 million accounts open, totalling assets of $242.6 billion.
Meanwhile, a report by the Association of Superannuation Funds of Australia (ASFA), The introduction of choice of superannuation fund, found that a majority of employers have not had any employees exercising choice.
“The ASFA study suggests that the rate of changing funds will continue at 11 per cent or 12 per cent of employees a year, with around half of that due to active choice by employees and the rest due to job change or fund closure,” said Philippa Smith, CEO of ASFA.
The study also found that a mass exodus to self-managed super funds (SMSFs) has not occurred and is probably not likely to.
Of those who have exercised choice, only 3 per cent requested their contributions be paid into an SMSF. Most of the SMSFs nominated appeared to be already established, rather than new entities formed to receive the contributions, according to the report.
Strong investment returns, regulatory restrictions on the selling of SMSF options and greater public awareness of the responsibilities involved in running an SMSF were among some of the possible reasons for the movement to SMSFs being lower than expected.
ASFA also predicted that both retail and industry funds are set to jointly dominate the market for superannuation in the future, with neither likely to significantly gain an upper hand.
