Industry funds take off

Industry superannuation funds have received a boost from the latest Australian Prudential Regulation Authority (APRA) superannuation performance data, which suggested they returned the strongest performance in the March quarter, 2005.

The APRA data, released in early July, showed that industry fund assets had grown by 4.1 per cent to $401.3 billion, while retail fund assets had grown by 2 per cent to $235 billion, with public sector funds growing by 2.4 per cent to $2.9 billion.

Reflecting the continued outsourcing of corporate superannuation funds, the APRA data revealed that assets within the corporate superannuation sector had remained relatively stable across the March quarter.

In the key area of self-managed and do-it-yourself superannuation, reflected in entities with less than five members, assets increased by 4.6 per cent to stand at $162.9 billion, suggesting that the area is still growing strongly, albeit at levels slightly below those of nine months ago.

Despite this, retail funds received the greatest proportion of contributions, accounting for 41.5 per cent during the quarter, compared to 26.7 per cent for industry funds, 23.7 per cent for public sector funds and just 8.3 per cent for corporate funds.

An interesting element of the APRA data for the March quarter was that it confirmed that investment returns had tapered off during the quarter, with the total return on assets being 1.2 per cent, with public sector funds registering a 1.9 per cent return, followed by industry funds with 1.5 per cent and corporate funds with 1.4 per cent.

Interestingly, retail funds recorded a return of just 0.7 per cent for the quarter.

The data also suggests the level of take-up of the Government’s co-contribution has not improved significantly over previous quarters.

The APRA figures showed that total contributions over the period were $11.8 billion, with the employer component representing the bulk of that amount, standing at $7.6 billion, while member contributions stood at $3.2 billion. Other contributions, including spouse contributions and the Government co-contribution, stood at just $1 billion.

The APRA figures showed that at the end of March, 30.9 per cent of superannuation assets were in wholesale trusts, with 25.3 per cent being invested in life insurance companies. Of this, it said individually managed mandates comprised 22.5 per cent of superannuation assets.

The APRA data noted that corporate and industry funds had more of their assets in wholesale trusts than was the case with public sector and retail funds.

It said that at the end of March, corporate funds had 35.9 per cent of their assets in wholesale trusts, while the industry funds had 39.4 per cent in wholesale trusts.