Contributions fall off the back of weak fundamentals
Rising unemployment and slowing GDP growth may be behind a recent drop in employer superannuation contributions, according to the Financial Services Council (FSC).
Weak growth (1.9 per cent) in total contributions for the 2012/13 financial year to Australian Prudential Regulation Authority (APRA)-regulated funds could also be the product of leakage to the self-managed sector, its latest Bond Report said,
It found total contributions for the June quarter were $112 million (0.4 per cent) less than June 2012, following a decline of $399 million between the March and June quarters.
June witnessed the lowest levels of employer contributions since the global financial crisis, which added to a $489 million drop between June 2012 and June 2013 (2.4 per cent) and overshadowed a 6.6 per cent increase in employee contributions to $377 million for the year.
“Weak growth in September 2012 and March 2013 have combined with the decline in this quarter to result in weak growth of 1.9 per cent for the last financial year,” said FSC chief economist James Bond.
“Rising unemployment and slowing GDP growth could be the reasons why people are holding back salary sacrificed contributions to their superannuation funds.”
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