Shrinking superannuation numbers hit by COVID and consolidation
Shrinking superannuation numbers hit by COVID and consolidation

Funds fall as super savers hit by COVID

Seven out of 10 superannuation funds suffered a fall in member numbers last financial year, impacted by the COVID early release scheme and other government changes.

But the super sector's biggest funds - including AustralianSuper, Aware Super and Hostplus - went from strength to strength, according to data from financial regulator APRA.

Big funds suffered account closures too but they were offset by more members signing up. Sector leader AustralianSuper, with 2.69 million member accounts, attracted 1100 new members a day during the financial year and its net gain was 203,010 accounts.

Super research group Chant West's general manager Ian Fryer said a federal government move to consolidate low-balance super accounts in 2019-20 had a big impact, while the COVID early release scheme caused people to empty their accounts.

Analysis by the Australian Institute of Superannuation Trustees found almost one million workers aged under 35 closed their accounts or drained them to less than $1000 because of 2020's early release scheme.

The scheme saw 3.4 million Australians withdraw $36bn from their super in two tranches up to $10,000 each.

While super funds have battled membership falls, their returns are on track for a strong 2020-21 financial year, up 9.9 per cent so far, according to Chant West.

"Returns are outstanding, and looking really good for this year," Mr Fryer said.

Super fund members are set to receive an extra boost from July 1 when compulsory employer superannuation payments are scheduled to rise from 9.5 per cent to 10 per cent.

Association of Superannuation Funds of Australia CEO Martin Fahy said the total number of super accounts dropped from 27.4 million in June 2019 to 24.4 million in June 2020.

"While the COVID-19 early release arrangements led to the closure of a few hundred thousand, the main driver of account consolidation activity has been the ATO proactively consolidating low-balance accounts from 2019 onwards," he said.

 

"As well, over 660,000 members in 2019-20 used myGov to consolidate their superannuation accounts."

Dr Fahy said fewer super accounts meant "fewer fees and bigger retirement balances for more Australians".

The APRA data shows some of the biggest membership losses were among retail funds run by Westpac, CBA, AMP, ANZ and MLC.

The strongest improvers - each adding more than 100,000 members - were AustralianSuper, Aware Super, National Mutual Retirement Fund, Hostplus and BT's Retirement Wrap.

Financial services data group Rainmaker Information's director of research, Alex Dunnin, said AustralianSuper "just goes from strength to strength".

"They have a really good fee proposition," he said.

"To get lots of new members joining is really, really hard."

Aware Super was formed last year through a merger between First State Super, VicSuper and WA Super, while last month QSuper and Sunsuper announced plans to merge into a $200n fund with two million members.

Originally published as Funds fall as super savers hit by COVID


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