SMSF sector growth predicted to slow
While the SMSF sector is expected to continue to grow over the coming the decade, the rate of growth is predicted to fall due to the ageing population, according to KPMG.
In its 2018 Super Insights Report, KPMG said across the APRA regulated super funds it expects there will be material consolidation of funds within the next 10 years, especially within the corporate fund sector.
It predicts that the number of funds across the industry and public segments will halve.
Conversely, the report expects that the SMSF sector will continue to grow.
“Albeit the rate is likely to slow as more funds close given the ageing population,” the report stated.
In terms of assets under management, the report predicts that assets within the superannuation industry will continue to grow, reaching $5 trillion by 2028.
“We expect the industry fund sector to overtake the SMSF sector to hold the largest share of the market at slightly less than $1.69 trillion, whilst the retail fund sector will experience slower growth, holding $1.21 trillion in assets,” the report said.
“We also expect public sector funds to experience slower growth, maintaining AUM of $1.16 trillion, whilst the corporate funds will experience little-to-no growth over this time, holding $76 billion by 2028.”
The report also predicts that both royal commission into banking and financial services and the Productivity Commission’s inquiry into the competitiveness and efficiency of the superannuation system will both have an impact on the legislative and regulatory landscape in 2018 and beyond.
The report said the royal commission and the super inquiry place even greater scrutiny on the sector, with potentially wholesale impacts.
“2018 is anticipated to serve up more short-term and ad hoc policy changes,” it said.
KPMG superannuation advisory partner Adam Gee said KPMG had hoped that the government’s move to enshrine the purpose of super into legislation would act as an important anchor for the development of future reform.
“It now seems unlikely that there will be any immediate end to the regulatory changes – we need to be careful that complexity and unnecessary costs which undermine member confidence and act as obstacles to innovation are not the result,” said Mr Gee.