Next 10 years tough for personal superannuation

Personal superannuation is set to play a smaller role in the total super market over the 10 years to June 2022, according to the latest market projections report from DEXX&R.

At June 2007 the personal super segment represented 16 per cent of total super access. DEXX&R predicts this figure will drop to 12 per cent by June 2022.

With the highest proportion of discretionary contributions in the retail super sector, personal super is sensitive to market returns, experiencing a lower rate of recovery than the self-managed super fund, industry fund and employer-sponsored master trust segments since June 2007, DEXX&R stated.

According to the report, funds under management/advice (FUM/A) for personal super were at $147.3 billion in June 2012, 21 per cent lower than the $185.7 billion recorded in June 2007.

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Despite this, DEXX&R predicts personal super to recover slightly during 2013 following positive returns for most asset classes during 2012.

The total super sector is projected to increase by an average of 8.6 per cent per annum to $3.76 trillion over the next 10 years, DEXX&R stated.

Retirement income is projected to grow at 10.7 per cent per annum to $323 billion, while group risk in-force premiums are projected to grow at 11.2 per cent per annum from $3.5 billion to $10.2 billion by June 2022.

DEXX&R said the combined effect of default employer contributions shifting into MySuper products and the transition to fee-for-service opt-in requirements for financial advice in super would make 2013 an uncertain year for continued strong growth in some super sectors.