The increase in the cap for concessional contributions has led to the fastest growth in seven years for discretionary contributions while compulsory contributions have plateaued for the past two years.
Financial Services Council (FSC) analysis of the quarterly MySuper data recently released by the Australian Prudential Regulatory Authority (APRA) found that while superannuation contributions totalled $1.6 billion for the past quarter, and were 7.2 per cent higher than in September 2013, most of this growth came from discretionary contributions.
FSC chief economist James Bond said this growth likely stems from the increase in concessional contributions from July 1 this year and that contributions were held over until the new financial year to benefit from the new higher contributions cap.
"The significant increase in discretionary contributions was most likely driven by two changes in concessional caps from 1 July 2014 which mean an increase in the cap from $25,000 to $30,000 for those under 50 years, and an increase to $35,000 for those over 50 years," Bond said.
Bond said compulsory contributions had changed little since September 2013 and was in line with low growth in wages and employment which were both well below the long term averages.
"Discretionary superannuation contributions have accounted for the $1.6 billion growth in superannuation contributions since September 2013 while employer contributions − that is, mostly compulsory payments − have remained flat."
"This is evidence of the income recession which has resulted from low employment and wages growth. There has effectively been no growth in employer contributions for two years," he said.
Bond also flagged longer term growth in member contributions stating that "between September 2013 and September 2014, member contributions to superannuation funds increased from $4.2 billion to $5.9 billion − 38 per cent −which is the fastest growth since June 2007."
