Scott Hartley, the CEO of Brisbane-based Sunsuper, announced May 31 that he's ready to move on, confident he's positioned his A$66 billion ($45.7 billion) superannuation fund to keep growing strongly, even as growth in Australia's retirement sector becomes harder to come by.
Mr. Hartley, who took the helm in January 2014 when Sunsuper was managing A$25 billion, said in a June 3 interview he has met his goals in terms of building an inclusive, collaborative investment culture capable of ramping up the fund's growth nationwide.
He said, meanwhile, that if he were instead starting out five years from now to tackle those challenges, the going would likely be considerably tougher.
With Australia's modern super system turning 30 this year, the amount of money being paid out to retirees continues to grow, offsetting an ever-larger portion of employers' compulsory contributions of 9.5% of salaries which drive the accumulation of retirement pools in the country, said Mr. Hartley.
That's led to a deceleration of growth in the industry's annual net inflows — to roughly 2% of assets under management now from closer to 6% or 7% a decade ago — bringing the day when inflows and outflows become balanced, and then negative, within view, he said.
Some industry veterans contend the super system's tailwind from net inflows should persist considerably longer.
Depending on the demographics of their memberships, some super funds may be fac- ing the end of net inflows already, said Martin Fahy, Sydney-based CEO of the Association of Superannuation Funds of Australia. But with industry consolidation, a coming boost in the compulsory employer contribution rate to 12% and the prospect of continued investment returns, one would expect that day of reckoning for the broader system to be "quite a ways off," he said.
Data from the Australian Prudential Regulation Authority, which oversees super funds, showed net inflows for the superannuation industry falling to A$37 billion for the year ended June 30, 2018, from A$43 billion the year before. It was the lowest annual tally for net inflows since A$35.9 billion for the June 2011 fiscal year.
Others contend the eventual end of net inflows won't be such a body blow.
Contributions should exceed benefits payments for at least the next 10 years, said David Knox, a Melbourne-based senior partner at Mercer Australia. And with systemwide assets expected to jump to A$5 trillion over the coming decade from A$2.8 trillion today, investment income should keep funds from getting squeezed even after net inflows come to an end, he added.