RBA warns on long-term super allocations

The Reserve Bank has outlined the impact Australia’s ageing population will have on the nation’s superannuation savings, urging caution as benefit payments increase relative to contributions.

Until recently, a majority of superannuation funds’ members have been in the accumulation phase, meaning that asset allocations have been geared for growth, the RBA stated in its Financial Stability Review, released yesterday.

Now, a significant number of investors are moving into the drawdown phase, with those over 60 years of age owning more than one third of superannuation assets.

As this transition progresses, the RBA anticipates funds are likely to increasingly invest in more conservative and liquid assets, including cash and deposits.

“This tendency is evident in the high allocation to deposits by SMSFs (more than one quarter of their assets); these funds have a significantly higher share of members in, or near, retirement than do other fund types,” the RBA stated.

“Superannuation funds will also need to carefully manage the liquidity implications arising from the ageing of the population and the maturing of the superannuation system, as benefit payments increase relative to contributions.”

This shift could also potentially increase the interconnectedness between banks and the superannuation industry, the RBA stated.

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