Retiree share of super assets set to skyrocket

Industry research firm Rainmaker Information said its latest research found that retirees will own 55 per cent of all superannuation assets within a decade.

As of the end of 2022, super fund members aged 65 or older, which Rainmaker said make up a large proportion of retirees, already account for 40 per cent of Australia’s $3.3 trillion super assets.

This is less extreme in APRA-regulated funds, with around 26 per cent of the assets held by retirees, however, this same cohort own two-thirds of assets in self-managed super funds.

According to Rainmaker projections, the overall share of retiree-owned assets in super funds will grow to 55 per cent by 2032 and could move beyond 70 per cent in 2042.

“These estimates have far-reaching implications for the superannuation landscape and investment strategies,” said Alex Dunnin, executive director of research and compliance at Rainmaker Information.

“Understanding the shifting dynamics and increased ownership by retirees is crucial for devising effective investment strategies and ensuring the long-term sustainability of the superannuation system.

“Some funds already have half of their assets owned by retirees. Furthermore, the retiree funds under management (FUM) ratio for APRA-regulated funds has increased by over one-third since 2015.”

In dollar terms, the value of retiree-owned assets sits at about $625 billion in APRA-regulated funds, growing to $1.3 trillion across all super funds.

Rainmaker added if superannuation savings nearly double to $7 trillion over the next decade, the projected figures for APRA-regulated funds could sit at $1.8 trillion in retiree assets – or triple the current amount. Across all funds, retiree assets could reach $4 trillion.

“Not-for-profit (NFP) super funds, which have been increasingly dominant, are expected to extend their influence into retirement superannuation as well,” said Mr Dunnin.

“This shift could significantly impact the retail superannuation segment, which has historically controlled a substantial share of this lucrative market.”

The Rainmaker analysis also found that fund consolidation is already shaping the landscape, with the 10 largest super funds currently controlling half of all retirement assets in APRA-regulated funds.

Currently, AustralianSuper is the largest fund in Australia, with Rainmaker projecting that its share of assets owned by retirees will grow from 20 per cent at the end of 2022 to 33 per cent in 2032. The largest projected jump, however, belonged to Aware Super, with Rainmaker expecting its 29 per cent share to hit 60 per cent in a decade.