Super contributions see third highest annual lift since GFC

With Australians contributing a record $163 billion into their accounts in 2021-22, the superannuation market is in robust shape, according to Rainmaker Information research.

Super contributions increased by 13 per cent, the third highest annual lift since the 2007-08 Global Financial Crisis.

On average, Australians paid 17.4 per cent of their total wages and salaries into superannuation in 2021-22. 

Compulsory superannuation guarantee (SG) contributions accounted for slightly less than 60 per cent of all contributions paid. 

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Alex Dunnin, executive director of research and compliance at Rainmaker Information, said: “The driving force behind this renaissance in contributions was a 9 per cent increase in employer contributions and a staggering 23 per cent increase in member contributions.”

However, the research also cast a light on how generous super tax concessions should be for high-income earners.  

While the ratio had witnessed a rise from almost 16 per cent in 2019, it remained lower than the 20.8 per ratio in 2017 from before the introduction of Transfer Balance Cap (TBC) that limited tax-free retirement savings to $1.6 million.

According to Rainmaker, the impact of the TBC was “so profound” that, if it had not been introduced, total super contributions would amount to some $212 billion or 23 per cent of all wages by 2022. 

Dunnin explained: “Contributions into superannuation were so strong through the past decade that each year they exceeded the amount paid as benefits by an average of 30 per cent.

“However, the contributions above-SG rate has fallen one-third since 2009 to be 7 per cent by 2022.”

He added: “Another major strategic shift is that the increasing rate of SG contributions, on its way to 12 per cent, has been accompanied by the squeezing down of the rate of voluntary member contributions”.

Previous Rainmaker research had found the introduction of TBCs could have resulted in decreased growth and contribution amounts into self-managed superannuation funds (SMSFs). 

Since its introduction, voluntary top-up member contribution had declined 60%. Members contributed $38 billion in 2016/17 prior to the TBC’s introduction and they then fell sharply for two years.

The research house said this data affirmed that the superannuation market, while resilient, was undergoing “profound disruption”.