The retail fund sector, including retail employer-sponsored and retail personal, is projected to trump the SMSF sector and reach approximately $2.5 trillion in assets in the next 20 years, according to the Deloitte report, Dynamics of the Australian Superannuation System: The next 20 years: 2011-2033.
Growth is also projected for industry funds, with their rate of growth expected to equal that of SMSFs over the period to 2033, reaching $1.93 trillion.
The report also found that growth in the SMSF market has slowed, partly due to a reduction in concessional contribution limits.
In addition, product innovation both within industry and within retail funds has acted to “blunt the advantages” of SMSFs in accumulation phase, the report stated.
“However, SMSFs are still expected to be the largest sector by far in the post-retirement superannuation market, reaching $800 billion in 2032 and eclipsing the retail personal segment in 2017,” said Deloitte super leader Russell Mason.
The report indicated the different behaviours of super members in pre- and post-retirement stages, with SMSFs being “the home of choice” for those retiring with significant super balances.
“Industry [and retail] funds have struggled to retain and attract post-retirees,” Wayne Walker, Deloitte Actuaries and Consultants partner, told a media briefing yesterday.
“Both have failed to stem the growth of SMSFs. Post-retirement is all about SMSFs, they’re the vehicle of choice for… tax reasons, estate reasons, psychological reasons, and people wanting to control their investments,” he said.
“The big issue for institutional funds and I include industry funds… is [deciphering] how they can better compete with the value that SMSFs are seen to deliver.”
The report also found Australia’s superannuation asset pool is projected to reach $7.6 trillion in the next 20 years, equating to 180 per cent of gross domestic product.