The size of the superannuation system will triple within 20 years, but the proportion of assets in SMSFs will fall from around a quarter to less than one-fifth at the same time, new research has stated.
“The Next 20 Years to 2045” report, released by Deloitte as the twelfth edition in its “Dynamics of the Australian Superannuation System” series, stated total net super assets are expected to increase from around $4 trillion in 2025 to $12.4 trillion by 2045.
The report said this growth would be heavily driven by compulsory contributions and investment returns, but would be held by a small group of very large funds as a result of consolidation, which has already created 10 funds that have more than $100 million in assets under management.
Despite this change, it stated each of the industry fund, retail fund and SMSF sectors would grow significantly over the next 20 years, but industry funds would do so at a rate above the other sectors, accounting for 55 per cent of all assets in 2045, compared to 46 per cent in 2025.
The SMSF sector would hold a smaller proportion of total assets, down to 18 per cent from 25 per cent, as structural factors place limits on its growth.
“The existing SMSF population is skewed towards older cohorts, and as these members transition into retirement, SMSFs are expected to commence material drawdowns, reducing aggregate balances over time,” the report stated.
“At the same time, contribution caps and transfer balance limits have significantly constrained the ability to accumulate very large super balances on a tax-advantaged basis, limiting the emergence of new, very large SMSFs even among high-wealth individuals.
“This trend is expected to be reinforced by ongoing improvements in the scale, cost efficiency, investment capability and retirement offerings of large industry and retail funds (especially the platforms), which are increasingly narrowing the historical advantages of SMSFs for some members.”
The report noted that while retail funds were coming back from a period of contraction, this recovery was uneven and structural in nature.
“Traditional retail superannuation funds and legacy master trusts have continued to face net outflows, while adviser-led platform providers such as Hub24, Netwealth and Macquarie have emerged as a key growth segment within the retail market,” it pointed out.
“The platform segment has experienced increasingly concentrated retail superannuation growth, even among some of the traditional retail providers, reshaping competitive dynamics and reinforcing a divergence between platform-based retail models and traditional retail master trusts.”
The modelling for the report was based on data from the Australian Bureau of Statistics, Australian Prudential Regulation Authority, ATO, Association of Superannuation Funds of Australia and research conducted by Deloitte.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason