Statistics. Quarterly Superannuation Performance (interim edition) June 2014 (issued 21 August 2014)

Transcription

1 Statistics Quarterly Superannuation Performance (interim edition) June 2014 (issued 21 August 2014) Australian Prudential Regulation Authority

2 Copyright Australian Prudential Regulation Authority (APRA) This work is licensed under the Creative Commons Attribution 3.0 Australia Licence (CCBY 3.0). This licence allows you to copy, distribute and adapt this work, provided you attribute the work and do not suggest that APRA endorses you or your work. To view a full copy of the terms of this licence, visit: Requests and inquiries concerning reproduction and rights should be addressed to: statistics@apra.gov.au Disclaimer While APRA endeavours to ensure the quality of this publication, APRA does not accept any responsibility for the accuracy, completeness or currency of the material included in this publication, and will not be liable for any loss or damage arising out of any use of, or reliance on, this publication. Forthcoming issues This publication will be released according to the timetable published on the APRA website. Revisions This publication includes revisions to previously published statistics when better source data becomes available or when compilation errors are uncovered. APRA identifies and quantifies significant revisions in its statistical publications. APRA regularly analyses past revisions to identify potential improvements to the source data and statistical compilation techniques, in order to minimise the frequency and scale of any future revisions. Updated data for December 2011 to March 2014 quarters have been included in this publication. Notation Except where indicated, amounts are expressed in millions of Australian dollars. Both the Australian dollar denominated transactions and the Australian dollar equivalent of foreign-currency denominated transactions are included. The symbol ' * ' indicates that the data have been masked to maintain confidentiality. Rounding Details on tables may not add up to totals due to rounding of figures. Full time series The PDF version of the Quarterly Superannuation Performance contains data from the past five quarters. The full time series from December 2004 is available in the Excel version and can be viewed by ungrouping the columns. Explanatory notes and glossary A set of explanatory notes is provided at the end of the publication to assist the reader in understanding the source and definitions of the data. Enquiries For more information about the statistics in this publication: or write to statistics@apra.gov.au Manager, Superannuation Statistics Australian Prudential Regulation Authority GPO Box 9836 Sydney NSW 2001 Australian Prudential Regulation Authority 2

3 Contents Important notice Important notice 4 Highlights Highlights Key statistics Key statistics Trends Financial performance - trends Table 1 Financial position - trends Table 2 Entity ratios Table 3 Explanatory notes Explanatory notes Glossary Glossary Australian Prudential Regulation Authority 3

4 Important notice APRA s superannuation statistics provide policymakers, regulators, trustees and the community with information to assess the overall performance of the superannuation system. APRA s quarterly and annual statistics provide data on earnings performance, fees, expenses and taxes. APRA s annual publication also provides data on membership profile, the number of investment options offered, the assets in the default investment option, and the composition of the default investment option. This is an interim Quarterly Superannuation Performance statistical publication for the June 2014 quarter. Interim Quarterly Superannuation Performance statistical publication June 2014 On 14 November 2013, APRA released a discussion paper on proposed changes to its superannuation statistical publications and confidentiality of superannuation data. The discussion paper is available at: APRA proposes to revise its Quarterly Superannuation Performance statistics publication and introduce a Quarterly MySuper Statistics report. The proposals incorporate recent changes to the superannuation reporting framework (explained further below), and meet APRA s legislative obligation to publish MySuper product-level statistics. APRA also proposes to release superannuation statistics in a new data dissemination system and make all non-confidential data accessible through this new system. Submissions on the proposals were due by Friday 31 January 2014 and APRA is in the process of selecting the proposed new data dissemination tool, which will take some time to fully implement. The revised quarterly statistical publications and reports are not expected to be available until APRA will therefore release selected statistics on an interim basis for quarterly reference periods until These statistics are similar to those included in the current quarterly publication. APRA has not included segmentation statistics in the interim publication, given APRA proposes changes to the segment types and any segmentation statistics are likely to be revised when the Quarterly Superannuation Performance statistical publication is finalised. Changes in reporting framework Since 2011, APRA has been working to implement a range of prudential requirements for the superannuation industry as part of the Stronger Super reforms. As part of these reforms, APRA released a new reporting framework in June The final reporting requirements, which commenced progressively from 1 July 2013, replace the reporting requirements that have been in place since For most RSEs, the first quarterly forms applied from the quarter ending September 2013 and the first annual forms from the year ending 30 June Information on the superannuation reporting framework, and the data collected under each reporting standard, is also provided on APRA s website. While this interim statistical publication is therefore based on data collected under two different reporting frameworks, the statistics are comparable. This interim publication only includes statistics that are based on data that are consistently reported under the old and new reporting requirements, with the exception of total assets and liabilities, as explained in the explanatory notes. Australian Prudential Regulation Authority 4

5 Revisions The June 2014 edition of the Interim Quarterly Superannuation Performance publication includes revisions to previously published statistics, due to better source data becoming available. Of the data revised and resubmitted to APRA, the following items have changed by at least 10 per cent or $100 million: Key statistics: Balance of life office statutory funds' was revised from $47.8 billion to $47.4 billion for March The Australian Taxation Office has revised self-managed superannuation fund data from June 2013 to March These revisions resulted in the following changes for the March 2014 quarter: Key statistics: Self- managed superannuation funds' assets revised from $558.6 billion to $548.1 billion. Several entities have reclassified their treatment of derivative positions and have resubmitted data to APRA for periods between September 2013 and March These revisions resulted in the following changes for the March 2014 quarter: Key statistics: Entities with more than four members: Total assets has been revised from $1,228.5 billion to $1,209.2 billion. Table 2: Total assets has been revised from $1,224,982 million to $1,205,779 million Table 2: Total liabilities has been revised from $70,584 million to $51,378 million These revisions did not have an impact on net assets. Several entities have reclassified their rollover and benefit payments data for periods between September 2013 and March These revisions resulted in the following changes in the March 2014 quarter: Table 1: Net rollovers was revised from - $466 million to - $617 million. Table 1: Total benefit payments was revised from $13,371 million to $13,173 million. Information on rate of return The rate of return (ROR) represents the combined net earnings of a superannuation fund's assets across all its products and investment options. The Superannuation Industry (Supervision) Act 1993 (SIS Act) requires that superannuation trustees formulate, and give effect to, an investment strategy that has regard to the whole of the circumstances of the superannuation fund and is in the best interest of its members. The ROR provides a measure of performance in the context of the fund s investment strategy. Many trustees provide individual members with the choice of a wide range of investment options and superannuation products, with different investment goals. APRA s statistics are not designed to provide individual members with information to compare the investment options offered. The Australian Securities and Investment Commission s MoneySmart website ( provides guidance on how to compare superannuation investment options and links to other sources of information for this purpose. For more information on ROR, refer to the August Response to Submissions paper on APRA s website: Australian Prudential Regulation Authority 5

6 Highlights Industry overview Superannuation assets totalled $1.85 trillion at the end of the June 2014 quarter. Over the 12 months to June 2014 there was a 15.3 per cent increase in total superannuation assets. Over the June 2014 quarter, total superannuation assets increased by 2.6 per cent. a Entities with at least $50 million in assets The analysis and comments below are based on superannuation entities with more than four members and with at least $50 million in assets as at the end of their previous year of income. Contributions, rollovers and benefit payments There were $27.6 billion of contributions in the June 2014 quarter, up 5.9 per cent from the June 2013 quarter ($26.1 billion). Total contributions for the year ending June 2014 were $95.0 billion. Outward rollovers exceeded inward rollovers by $531 million in the June quarter. There were $14.7 billion in total benefit payments in the June 2014 quarter, an increase of 8.3 per cent from the June 2013 quarter ($13.6 billion). Total benefit payments for the year ending June 2014 were $55.3 billion. Net contribution flows (contributions plus net rollovers less benefit payments) totalled $12.4 billion in the June 2014 quarter, an increase of 15.1 per cent from the June 2013 quarter ($10.8 billion). Net contribution flows for the year ending June 2014 were $37.3 billion. The graph below shows the composition of net contribution flows for each quarter from December 2008 to June a Over the June 2014 quarter, total assets for pooled superannuation trusts (PSTs) decreased by 4.1 per cent, from $112.8 billion to $108.2 billion. One PST paid $5.3 billion to unit holders during the June 2014 quarter as the trust is winding up. PSTs are not included in total assets as their assets are captured in other superannuation entities. Australian Prudential Regulation Authority 6

7 Financial performance The annual industry-wide rate of return (ROR) for entities with over $50 million in assets for the year ending 30 June 2014 was 11.6 per cent. The graph below shows the ROR for each quarter from December 2004 to June Financial position Over the June 2014 quarter, total assets for entities with at least $50 million in assets increased by 3.0 per cent ($35.6 billion) to $1,241.4 billion. Australian Prudential Regulation Authority 7

8 Key statistics Superannuation industry quarterly estimates Assets ($ billion) Number of entities Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Entities with more than four members 1, , , , , Pooled superannuation trusts Small APRA funds ,950 2,962 2,970 2,979 2,745 Single-member ADFs Self-managed super funds b , , , , ,176 Balance of life office statutory funds Total a c 1, , , , , , , , , ,324 Retirement savings accounts Asset figures for March 2014, December 2013, September 2013 are estimated by applying June 2013 coverage ratios and growth rates. Growth rates for have been applied to APRA-regulated small funds. a Figures from September 2013 are reported under the new reporting framework. Prior quarters figures are based on a previous reporting framework. The change in total assets reflects, to some extent, the effects of transition to the new reporting framework and should be used with caution. See the explanatory notes for further details. b Estimated data on self-managed superannuation funds are provided by the Australian Taxation Office (ATO). c Total assets does not include pooled superannuation trusts. Coverage ratios used to estimate total assets Entities with greater than four members Growth rates Other entities Jun 2013 Jun 2014 > $50 million (actual) All entities (actual) Coverage ratio > $50 million (actual) All entities (estimated) Jun 2012 (actual) Jun 2013 (actual) Growth Jun 2014 (estimated) By fund type ($b) By fund type ($m) Entities with more than four members 1, , % 1, ,244.9 Small APRA funds 1,830 1, % 2,087 Pooled superannuation trusts % Single-member ADFs % 44 Australian Prudential Regulation Authority 8

9 Table 1 Financial performance - trends Entities with at least $50 million in assets ($ million) Quarter end Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Year end Jun 2013 Year end Jun 2014 Net assets at the beginning of the period 1,012,563 1,039,107 1,092,801 1,138,791 1,154, ,737 1,039,107 Total contributions 26,081 22,018 22,740 22,597 27,623 88,439 94,977 Contribution tax and surcharge 2,805 2,151 2,232 2,286 2,635 9,249 9,303 Net rollovers -1,734-1, ,421-2,299 Total benefit payments 13,580 13,617 13,854 13,173 14,704 50,591 55,348 Net contribution flows 10,767 7,357 8,778 8,807 12,389 30,427 37,330 Death and disability insurance Total proceeds on insurance policies ,503 2,764 Cost of member benefit insurance 1,363 1,523 1,528 1,602 1,647 5,211 6,301 Net flows 7,295 4,333 5,715 5,617 8,826 18,470 24,491 Total investment income 20,991 51,744 44,053 12,004 26, , ,809 Total investment expenses ,062 2,715 Net investment income 20,380 51,088 43,435 11,340 25, , ,094 Total operating expenses 1,452 1,296 1,504 1,355 1,592 5,412 5,747 Other income Net earnings 19,024 49,882 42,031 10,098 23, , ,783 Tax expense on earnings ,612 1, ,136 3,929 Net earnings after tax 19,267 48,270 40,276 9,974 23, , ,855 Net operating performance after tax 26,563 52,603 45,991 15,590 32, , ,346 Other changes a -19 1, ,137 Net assets at the end of the period 1,039,107 1,092,801 1,138,791 1,154,402 1,186,589 1,039,107 1,186,589 Number of entities a Other changes for September 2013 include $1,091 million net assets at the beginning of the quarter for new entities who had over $50 million in assets at 30 June Inward rollovers of $823 million were not included in quarters prior to September 2013 as these entities were not captured in the quarterly reporting population prior to September This table does not include pooled superannuation trusts as their assets are captured by other superannuation entity categories. Australian Prudential Regulation Authority 9

10 Table 2 Financial position - trends Entities with at least $50 million in assets ($ million) Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Total assets a b 1,062,580 1,144,748 1,191,603 1,205,779 1,241,364 Total liabilities a 23,474 51,947 52,812 51,378 54,774 Net assets to pay benefits 1,039,107 1,092,801 1,138,791 1,154,402 1,186,589 Number of entities a Figures from September 2013 are reported under the new reporting framework. Prior quarters figures are based on the previous reporting framework. The change in total assets and total liabilities reflects, to some extent, the effects of transition to the new reporting framework and should be used with caution. See the explanatory notes for further details. b This table does not include pooled superannuation trusts as their assets are captured by other superannuation entity categories. Australian Prudential Regulation Authority 10

11 Table 3 Entity ratios Entities with at least $50 million in assets Quarter end Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Year end Jun 2013 Year end Jun 2014 Total Net investment income ($m) 20,380 51,088 43,435 11,340 25, , ,094 Other income ($m) Total operating expense ($m) 1,452 1,296 1,504 1,355 1,592 5,412 5,747 Tax expense on earnings ($m) ,612 1, ,136 3,929 Net earnings after tax ($m) 19,267 48,270 40,276 9,974 23, , ,855 Cash flow adjusted net assets 1,016,211 1,041,273 1,095,658 1,141,599 1,158,815 Rate of Return (%) 1.9% 4.6% 3.7% 0.9% 2.0% 14.0% 11.6% Number of entities Australian Prudential Regulation Authority 11

12 Explanatory notes Structure The Quarterly Superannuation Performance comprises statistics on superannuation entities had at least $50 million in assets in their prior year annual return and were not a small APRA fund or singlemember approved deposit fund. In the June 2014 quarter this captures 210 superannuation entities, comprising 192 APRA-regulated superannuation entities and 18 exempt public sector schemes. Statistics on the whole superannuation industry are published once a year in the Annual Superannuation Bulletin. APRA also produces the Superannuation Fund-level Rates of Return and the Superannuation Fundlevel Profiles and Financial Performance publications which provide disaggregated data in relation to all APRA-regulated superannuation funds (excluding pooled superannuation trusts, exempt public sector superannuation schemes, small APRA funds and single-member approved deposit funds). Source The statistics in this publication have been prepared from the following sources: superannuation returns submitted to APRA under the Financial Sector (Collection of Data) Act 2001 and from exempt public sector schemes that report to APRA under a Heads of Government agreement between the Commonwealth and each of the State and Territory Governments; data provided by the ATO on self- managed superannuation funds (SMSFs); returns submitted to APRA under the by registered life companies in Australia; and returns submitted to APRA by retirement savings account providers under the. Information on expenses and tax Information on expenses and taxes included in this publication should be used for indicative purposes only. Expenses are generally understated by funds within this publication for the following reasons: indirect investment expenses are generally not reported as this information is not separately identifiable in most cases; not all funds are able to provide complete information on entry and exit fees; and current data collected does not adequately capture some expenses, such as front- end and ongoing commissions. Funds also have different approaches to recognise future tax liabilities and assets. Other notes Pooled superannuation trusts (PSTs) have not been included in financial aggregates because PST assets are from other superannuation funds and are reported elsewhere. Retirement saving accounts (RSAs) are not included in financial aggregates as much of the information is not included in the collections. Unless specified, all ratios stated have not been annualised. Australian Prudential Regulation Authority 12

13 Comparison with Annual Superannuation Bulletin Figures published in the Quarterly Superannuation Performance and the Annual Superannuation Bulletin, whilst relatively close, will not match for the following reasons: Different populations - the population of the quarterly publication comprises funds with at least $50m in total assets and is a subset of the population of the annual publication which comprises all superannuation funds. Different fund reporting periods - not all funds have the same end date for their year of income, although for the majority of funds it is 30 June. The Quarterly Superannuation Performance uses funds' year to date data as at the end of each quarter. The Annual Superannuation Bulletin uses audited annual accounts that correspond to the funds' year of income. The time periods these two publications cover are not perfectly matched, but are similar since the majority of funds have the same end date for their year of income. The change in derivative reporting under the new reporting framework The reporting of derivative assets and derivative liabilities differs under the old and new reporting frameworks, and this affects the value of total assets and total liabilities. Previously, derivative assets and liabilities held via individually managed mandates were not included in APRA s financial position statement. Under the new reporting requirements, derivative assets and liabilities held via individually managed mandates are included in APRA s financial position statement. APRA estimates that an additional $21.54 billion has been included in total assets for the industry, and $20.61 billion in total liabilities, for the September 2013 quarter, as a result of the reporting change. Australian Prudential Regulation Authority 13

14 Glossary Approved deposit funds (ADFs) can receive, hold and invest certain types of rollovers until such funds are withdrawn or a condition of release is satisfied (depending on the preservation status of the assets). ADFs can be either single member or multi member. Balance of life office statutory funds refers to assets held for superannuation or retirement purposes in statutory funds of life insurance companies, excluding the assets held in life office statutory funds by superannuation entities. The balance of life office funds includes annuities and assets backing non-policyholder liabilities. These products are regulated under the Life Insurance Act (1995). Cash flow adjusted net assets is the sum of net assets at the beginning of the period and half of net flows. Contributions tax and surcharge represents tax expenses in relation to taxable contributions made to the superannuation entity during the period (contributions tax) and contributions surcharge tax. Cost of member benefit insurance prior to September 2013, represents members' death and/ or disability insurance premiums expense less rebates received or accrued from insurers in relation to insurance premiums; from September 2013, represents outflows incurred through insurance activities. Includes premiums denoted from member accounts, reinsurance premiums charged, expenses incurred for insurance claims and changes in insurance liabilities or reinsurance assets. Employer contributions are contributions received from employers and includes (but is not limited to) all mandated employer contributions (such as Superannuation Guarantee amounts), salary sacrifice contributions and voluntary employer contributions, less any repatriation to employer sponsors. Appropriations for major Commonwealth public sector superannuation schemes where benefits were paid directly from Commonwealth Consolidated Revenue are classified in employer contributions. Exempt public sector superannuation schemes (EPSSSs) are public sector superannuation schemes that choose not to be regulated by APRA. However, for statutory purposes, a number of EPSSSs report to APRA under an agreement between the Commonwealth Government and each of the State and Territory Governments. Schedule 1AA of the SIS regulations contains a list of EPSSSs. Fund reporting period is the end date of a fund's year of income. Investment expenses are all expenses which are associated with the generation of income on the investment portfolio of the superannuation entity. Investment income is income generated from the investment portfolio of the superannuation entity. Inward rollovers refer to member s benefits that have been rolled over or transferred in from another superannuation entity and may include assets transferred from life insurance offices and retirement savings accounts (RSAs). Life office statutory funds include monies associated with investment in insurance or life policies. Superannuation assets invested in life office statutory funds are sourced from life insurance returns submitted to APRA under the Life Insurance Act (1995). Lump sum benefit payments are benefit payments paid as a lump sum and includes (but is not limited to) retrenchment, redundancies, resignation and disability benefit payments. This item does not include lump sum rollovers or pension benefit payments. Member contributions are contributions received from members and include (but are not limited to) member post-tax contributions and self-employed contributions. This item does not include rollovers or transfers from other superannuation entities. Net assets are total assets less total liabilities. Net assets at the beginning of the period are assets at the end of the previous period. Australian Prudential Regulation Authority 14

15 Net contribution flows is total contributions plus net rollovers less benefit payments and are gross of contributions tax and surcharge. Some entities are unable to provide a breakdown of net contributions flows into contributions, rollovers and benefit payments. Net contribution flows is not dependent upon these breakdowns and is correct within reasonable bounds of statistical accuracy. Net earnings after tax are net earnings generated during the period less tax expense on earnings. Net earnings are the sum of net investment income and other income less operating expenses. Net flows is used in the calculation of rate of return (ROR). It is derived as net contribution flows less contribution tax and surcharge plus total proceeds on insurance policies less net cost of member benefit insurance. Net investment income is investment income (including unrealised gains/losses) less investment expenses. Net operating performance after tax is net flows plus net earnings after tax. Net rollovers is the difference between inward rollovers and outward rollovers. Number of entities is the number of active superannuation entities in the period. Operating expenses include expenses incurred which are not ordinarily directly associated with the generation of investment income (i.e. expenses that are not directly related to the investment portfolio of the superannuation entity, but more toward the administration of the superannuation entity). Other changes are calculated using the residual of net assets at the beginning and end of the quarter and net operating performance after tax. This item includes other reconciling items and changes in the quarterly population. Other contributions refer to contributions other than employer or member contributions and include spouse contributions and government co-contributions. Other income includes amounts that do not fall into the specified income categories. Outward rollovers are those monies which are transferred from the superannuation entity to another superannuation entity. Pension benefit payments refer to benefits paid to members in the form of a pension and includes complying pensions, allocated pensions and annuity payments. Pooled superannuation trusts (PSTs) are trusts in which regulated superannuation funds, approved deposit funds and other PSTs invest. Pooled superannuation trusts are not included in total assets as their assets are captured in other superannuation entity categories. Rate of return is net earnings after tax divided by cash flow adjusted net assets. Year ended rates of return are calculated by geometrically linking the quarterly RORs, i.e. Year ended ROR = (1+ ROR t-3 )x(1+ror t-2 )x(1+ror t-1 )x(1+ror t )-1 Registrable superannuation entity (RSE) is a superannuation entity, not including self-managed superannuation funds. From 1 July 2006, all trustees operating APRA-regulated superannuation entities were required to hold a RSE Licence and register their superannuation entities with APRA. Retirement savings accounts (RSAs) are products offered by licensed authorised deposit taking institutions, life insurance companies and prescribed financial institutions that provide a capital guaranteed product for retirement savings. Self-managed superannuation funds (SMSFs) are superannuation entities regulated by the Australian Taxation Office that have less than five members, all of whom are trustees or directors of the corporate trustee. No member can be an employee of another member unless they are related. Small APRA funds (SAFs) are superannuation entities regulated by APRA with less than five members. Superannuation entity is a regulated superannuation fund, an approved deposit fund or a pooled superannuation trust. Australian Prudential Regulation Authority 15

16 Tax expense on earnings represents the tax associated with operating performance. It includes the tax on investment earnings but excludes contributions tax and surcharge. Total assets are the sum of the resources held by a trustee on behalf of a fund. These include cash, investments and receivables. Total benefit payments include lump sum benefit payments and pension benefit payments. Total liabilities include direct holdings of derivative financial instruments, total borrowings, deferred and current tax liabilities and sundry creditors. Total contributions is equal to the sum of employer, member and other contributions. Total proceeds on insurance policies are the proceeds received from insurers including proceeds received due to the death of a member and proceeds received in relation to disability of members. Trustee is a person or company acting for the benefit of another party, with fiduciary and legal responsibilities, and is responsible for managing assets of beneficiaries. Australian Prudential Regulation Authority 16

17 Telephone Website Mail GPO Box 9836 In all capital cities (except Hobart and Darwin) SA_ST_QSP_072014