Superannuation in the year 2040

Pension payment levels in the superannuation system will be three times the current level by 2040, according to KPMG.

Speaking at the Association of Superannuation Funds of Australia (ASFA) conference, KPMG partner and national sector leader, asset and wealth management, Linda Elkins, said the overall net outflow ratio of 70% would continue till 2040.

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Source: KPMG

Reaching $3 trillion in the 2021 financial year, Australia’s superannuation system was the fifth-biggest pension system, behind Canada, Japan, the UK and the US. Australia had 15 funds represented in the top 300 funds globally with AustralianSuper at number 22 and Australian Retirement Trust at number 24.

Elkins said it was important to note that 70% of net inflows and 79% of contributions were concentrated in the top 13 funds.

“So that question everyone loves to ask us is how many funds will there be [by 2040]? And I must say all of those 13 funds are currently over $50 billion.

“If I had to, and this isn't a KPMG view, my view probably is therefore to say there's going to be 13 large funds is a reasonable starting point.”

With 51% of funds currently in net outflow, Elkins said these funds’ key concerns would be sustainability, liquidity, retention and attraction of members investment governance, the performance test, and delivering member outcomes.

According to KPMG, the number of females for whom superannuation was their primary source of retirement income was 17%, compared to 30% for men, a trend that would increase in both demographics.

“A number like 50% of people are going to be relying on superannuation as their primary source of income in retirement [by 2040],” Elkins said.

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