Superannuation balances for lower-paid workers are growing more strongly than the average across the workforce as employment grows and older workers retire.

New figures from the Australian Prudential Regulation Authority (APRA) show that for the year to June 2017, the average balance for all super funds rose 12.7 per cent to $62,855. The average balance for MySuper products, however, rose 20.6 per cent to $36,970, APRA found.

MySuper products tend to be used by people on awards or people just starting out in the workforce. So the strong growth in that area means that super balances are growing more quickly for those groups than for more highly-paid workers with more established careers.

Overall, the superannuation system grew by 19.25 per cent over the period to $2.504 trillion while the growth for APRA-regulated funds was 25.1 per cent. Non-APRA regulated funds, which are overwhelmingly self-managed super funds, grew by 12.06 per cent to $696 billion, which is less than half the rate of APRA funds.

That builds on the trends of the previous year when the spiralling growth of SMSFs that had seen them account for 30 per cent of all super balances as wealthy people made big contributions. Their growth rate has slowed in part because new rules have substantially cut the amounts able to be contributed to superannuation.

Total contributions to the super sector rose 15.3 per cent to $116.5 billion. Contributions to MySuper products rose by about the same percentage to $54.8 billion.

Research from Roy Morgan showed that industry funds are becoming more attractive to people with higher superannuation balances. And of the top 15 funds by size, the top five in terms of satisfaction were industry funds.

Satisfaction levels in the largest super funds. Source: Roy Morgan

The research group found that in February 2018, superannuation fund members with $250,000 or more had higher satisfaction with the financial performance of their investments if they were in an industry fund compared to those belonging to either retail funds or those with an SMSF.

And it seems the more money people had the happier they were with industry funds.

“It is somewhat surprising that the highest satisfaction for industry funds was for those members with balances of $700,000 or more [who] scored 87.8 per cent, well ahead of SMSFs [82.5 per cent] and retail funds [80.2 per cent],” Roy Morgan found.

The results turn on their head the status quo of earlier years where those with high balances in retail funds were generally happiest with their investments. Roy Morgan found that retail fund satisfaction only led industry funds for very low balances under $5000. 

Here, the relative satisfaction level was markedly in retail funds’ favour at 61.4 per cent while industry funds satisfaction sat at 49.7 per cent.  

However, overall SMSFs lead in satisfaction over all balance levels, scoring 73.5 per cent (down 2.6 percentage points over the last year) for satisfaction among their members.

“This is because they have very few members with balances of less than $100,000, the area with the lowest satisfaction,” Roy Morgan found.

Satisfaction levels among different fund types and sizes. Source: Roy Morgan

Satisfaction levels are a predictor of how people will act with their super because few make a study of overall industry performance.

“Despite the regular publication of superannuation performance tables, it is unlikely that the majority of fund members will be engaged enough to follow them closely but rather act or not on how they feel about the performance of their current fund. Our research has highlighted the need to measure members’ satisfaction with performance overall and by account balance,” Roy Morgan director Norman Morris said. 

*The New Daily is owned by industry super funds