Employer contributions drive strong superannuation growth
High levels of employment have amounted to the strongest growth in Australian Prudential Regulation Authority (APRA) regulated super fund contributions since the global financial crisis in the 2011-12 financial year, according to the Financial Services Council (FSC)'s Bond Report.
Total contributions increased by 7.3 per cent to $85.9 billion, compared to $80.1 billion in the 2010-11 financial year.
But growth came from compulsory contributions and not discretionary contributions, which decreased by $0.2 billion in the 2011-12 financial year.
FSC chief economist, James Bond said the growth was being propelled by good employment numbers, while investor confidence was having an ill effect on discretionary contributions.
"Discretionary flows continue to disappoint, reflecting a lack of consumer and investor confidence. Although discretionary flows represent only around 20 per cent of total flows, strong voluntary flows are necessary if Australians are to have enough money saved for their retirement," the report said.
The Bond Report relies on the Australian Prudential Regulation Authority's quarterly data on APRA-regulated super fund contributions. APRA reported total contributions of $90 billion, however, the FSC removed a one-off $4.6 billion superannuation liability contribution by the NSW Government in the June quarter, as it almost doubled contributions to public sector funds in the second quarter.
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