Retirement Income Guide

September 2017

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Editorial Finding the sweet spot on retirement income

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elcome to Money Management’s inaugural annual Retirement Income Guide.

This publication is intended to deliver to readers a snapshot of the evolving landscape around retirement income products and the underlying Government policy direction.

When the Federal Government used the 2016/17 Federal Budget to flag a move towards the tax changes necessary to facilitate retirement income streams it was seen as something of a green light for product development but, nearly 18 months down the track, that development has proved slow.

While much of the necessary underlying legislation has passed the Parliament, the discussion and consultation around what will represent appropriate “comprehensive income products in retirement” (CIPRs) remains a work in progress with both product manufacturers and superannuation funds paying close attention.

While the Government has indicated a desire to see the development of a so-called MyPension product, there are strong views that one size will not necessarily fit all.

But what is already certain, and clearly outlined in this, Money Management’s first Retirement Income Guide, is that annuities will form the foundation of the new regime with resultant product sets being differentiated by how much they vary on the theme.

And despite all the work that has been carried out around the development of CIPRs and the notion of a MyPension product, annuities have already become a fact of life for many superannuation funds who have entered into arrangements with major manufacturers such as Challenger.

Just as importantly, annuities have become an integral offering on the part of the major platform providers such as Colonial First State.

We hope you find the guide useful.

Mike Taylor Managing editor

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About the publisher FE Money Management Pty Ltd Level 11 4 Martin Place, Sydney, 2000 Managing Director: Mika-John Southworth Tel: 0455 553 775 mika-john.southworth@moneymanagement.com.au Managing Editor/Editorial Director: Mike Taylor Tel: 0438 789 214 mike.taylor@moneymanagement.com.au News Editor: Malavika Santhebennur Tel: 0438 776 358 malavika.santhebennur@moneymanagement.com.au Features Editor: Jassmyn Goh Tel: 0438 957 266 jassmyn.goh@moneymanagement.com.au Associate Editor - Research: Oksana Patron Tel: 0439 137 814 oksana.patron@moneymanagement.com.au Journalist: Hope William-Smith Tel: 0438 836 560 hope.william-smith@moneymanagement.com.au Product Marketing Manager: Dale Henry Tel: 0439 076 518 dale.henry@moneymanagement.com.au ADVERTISING Sales Director: Craig Pecar Tel: 0438 905 121 craig.pecar@moneymanagement.com.au Account Manager: Ben Lloyd Tel: 0438 941 577 ben.lloyd@moneymanagement.com.au Account Manager: Tom Nagle Tel: 0438 879 685 tom.nagle@moneymanagement.com.au PRODUCTION Graphic Design: Henry Blazhevskyi Subscription enquiries: www.moneymanagement.com.au/subscriptions Money Management is printed by Bluestar Print, Silverwater NSW. Published fortnightly.

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Contents 03

Editorial 12

08

Annuities

Sunsuper: Advice improves lifestyle outcomes

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Contents 22

16

Challenger: A starting point for retirement income strategies

Retirement transitions 32

30

Inflows and outflows

Market projections RETIREMENT INCOME GUIDE | MONEY MANAGEMENT | 7

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ANNUITY

Products

Annuities the natural retirement default?

Mike Taylor writes that while other options may exist, annuitisation has become the preferred foundation for the development of Government approved retirement income products in Australia.

T

he Federal Treasury is still working its way through industry responses to its discussion paper on the ‘Development of the framework for Comprehensive Income Products for Retirement (CIPRs)’ but at its core it represents a discussion about how pooled products, typically annuities, can best meet the needs of Australian retirees.

There is a range of retirement income products utilised in the US, the UK and elsewhere but in Australia it has become obvious that annuitisation will form the bedrock of the Government’s approach to what might ultimately emerge as a default ‘MyPension’ product.

When the Government used its 2016/17 Budget to announce its intention to remove many of the tax and other barriers to the development of retirement income products it did not so much represent a green light for the industry to embark on some serious product development but, rather, a confirmation of the need to progress an issue which had been on the industry’s agenda for most of the past decade.

While the Government’s discussion paper was released only in December, last year, the industry had been seriously modelling outcomes at least four years’ prior to that and concluding, on the same basis as the Government, that pooled arrangements represented the best option.

The Association of Superannuation Funds of Australia (ASFA) director of research, Ross Clare published a comprehensive analysis in October 2013 in which he stated that, while a variety of financial products could be used to deliver an income stream in retirement, ASFA had chosen to focus “on those that involve some sort of guarantee in terms of income-stream payments for individuals who reach an advanced age”.

Clare noted that there were a number of financial products which explicitly dealt with the financial consequences of longevity and that these included “deferred annuities” and “variable annuities”.

He defined deferred annuities as follows: “A deferred annuity is a type of annuity contract that delays payments of income,

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ANNUITY

Products

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ANNUITY

Products

instalments or a lump sum until the investor elects to receive them.”

Clare then defined variable annuities as follows: “A variable annuity is purchased with either a lump sum or over time, with the premiums paid allocated among the various separate account funds offered in the annuity contract. The investment return and income paid by the variable annuity fluctuates with the performance of the underlying investments. However, in return for a fee, the provider of such products may guarantee a minimum payment, either for a set period or for life.

The more the guarantees, the higher the fees paid.”

The ASFA director of research then made the point that while both variable and deferred annuities had been popular overseas, including in the US, Asia, and Europe, Australia had experienced much more limited exposure with only one or two providers of variable annuities.

“Deferred annuities have not really been on offer in Australia or purchased to any marked extent,” Clare’s analysis said, noting that while a lack of demand for annuity products (with the recent exception of term annuities) had been partly responsible for this, regulatory, and tax settings had also contributed to the outcome.

The 2013 ASFA paper then went on to itemise the changes to the tax settings

which would be necessary to see the greater take-up of annuities-type products many of which were then ref lected in the proposed legislative changes which f lowed from the Government’s 2016/17 Budget announcement.

The Government’s rationale

The driving force behind the Government’s 2016/17 Budget announcement was the harsh reality driven home by the successive Treasury Intergenerational Reports which pointed to increasing heavy reliance on the Age Pension as Australians live longer and actually outlive their superannuation accumulations.

The Treasury discussion paper issued in December 2016 pointed to the limitations of people drawing down on their super balances in the form of an account-based pension and just how quickly they would likely find themselves relying on the Age Pension.

“Individuals with an account-based pension can choose the level of drawdown (at or above legislated minimum rates). However, drawing income above the minimum rates causes individuals to face an increased risk of outliving their superannuation savings,” the discussion paper said adding that, “This is a trade-off most Continued on page 18

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ANNUITY

“Australia has an under developed retirement income stream market, with at least 94 per cent of pension assets in account based pensions.”

– Australian Treasury

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9%

9%

14% Travelling the world

14%

At home with my feet up

What’s my dream retirement?

Driving around Australia Helping raise grandkids Volunteering

37%

Other

17%

Do you know how much you need for retirement?

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Do you feel in control of your financial future?

Do you feel confident making financial decisions?

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Financial position in retirement

Net lifestyle improvements after implementing advice

Trauma cover

Children in private school

trips

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Family holidays pre-retirement

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Super Fund of the Year 2017

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Strategies

A starting point for retirement income strategies

R

etirement is different. Cash flow takes centre stage as opposed to maximising returns. Not only does cash flow need to be designed to meet various objectives, part of this cash flow needs to be sustained for a very long, and usually an undeterminable, period of time.

The long time in retirement also means exposure to growth asset classes will be essential for many clients. This, however, generally means exposure to market risk, which affects retirees in a very different way. The need for regular cash flow subjects the retiree’s portfolio to the risk of an unfavourable order of returns, commonly known as sequencing risk.

The different needs of retirees and the risks they face require strategies which differ to those used when saving for retirement.

Where to start

Research by National Seniors Australia identified a number of priorities that are important to retirees. Of these priorities, two are peace of mind (having income to cover their essential expenses) and having income last as long as they do.

For many retirees the government funded Age Pension is a retirement income solution that can provide a base level of income to

help meet these priorities. However, in many cases this income source alone is not enough, creating a possible income gap in the later stages of retirement.

To help reduce that gap, retirement income strategies that prioritise an additional layer of secure income above the Age Pension should be considered.

In many cases a lifetime pension/annuity can be used to create this additional layer of income. They provide regular known payments for life, which can be indexed to inflation and are not affected by market volatility.

Another benefit of this strategy is that the client’s essential spending goals are matched with suitable investments. This can give them confidence that their essential income needs will be met over their lifetime even in the situation where they have depleted their capital.

From a planning perspective, once everyday expenses have been covered, other market-based investments, for example account-based pensions, can be used to help meet discretionary spending goals during their retirement for as long as possible.

National Seniors Australia – Retirees’ Needs and Their (In)Tolerance for Risk – March 2013

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ANNUITY

Products

Continued from page 11

individuals are unwilling to make: a majority of individuals draw down account-based pensions at or close to the minimum rates”.

However, it pointed out that drawing down an account-based pension at minimum rates reduced the risk of outliving one’s super wealth, but it also reduced the standard of living that individuals could enjoy in retirement.

“In addition, it implies that a substantial percentage of superannuation assets is expected to be bequeathed rather than used as income during retirement,” it said. “By managing their superannuation assets in this way, individuals are self-insuring against longevity risk, which is an expensive way of managing this risk (measured in terms of forgone income).”

“It means that individuals in retirement are drawing a lower rate of income so assets will last for the longest possible lifespan (potentially 40 years).”

The discussion paper then suggested that: “alternatively, products that pool longevity risk could potentially provide higher levels of income (all else equal), because they are priced to draw down assets over the life expectancy of the pool (typically closer to 20 years)”.

The chart below shows that, in an accountbased pension, if an individual chooses to draw down their superannuation at a faster rate, they can increase their income (moving from point ‘A’ to point ‘B’), but the risk of outliving their

savings also increases.

The Treasury discussion paper said there was also a lack of choice for individuals who were looking for an alternative retirement income option in Australia that better met their needs.

“Australia has an under developed retirement income stream market, with at least 94 per cent of pension assets in account based pensions,” it said. Despite significant heterogeneity among retirees, almost all Australian retirees choose a standard account-based pension as their retirement income product.”

What the Government has proposed

The Government’s discussion paper around the development of comprehensive income products in retirement (CIPRs) states that it is “proposed that trustees be able to offer to their members at retirement a mass-customised CIPR as the retirement income product that is suitable for the majority of members of the fund”.

It suggests that this will “present individuals with an anchor or starting point for the retirement income product decision”.

“Having made the decision to retire and upon being presented with a CIPR as an option, members would need to make an active decision to commence the CIPR, or they may choose to take their retirement benefits Continued on page 20

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ANNUITY

Products

LONGEVITY VERSUS INCOME

RISK OF RUNNING OUT OF INCOME

Increased income through faster drawdown of an account-based pension B

Account-based pension drawn down at minimum rates

A EXPECTED ANNUAL REAL INCOME

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TREASURY’S PROPOSED CIPR MODEL

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RISK OF RUNNING OUT OF INCOME

ANNUITY

B

Account-based pension drawn down at minimum rates

Products A

EXPECTED ANNUAL REAL INCOME

TREASURY’S PROPOSED CIPR MODEL

Trustee offers CIPR to member CIPR is an anchor for decision Member can decide to:

Commence the CIPR

Commence an alternative CIPR

Select alternative product (e.g. accoun-based pension)

Continued from page 19 another way (including, where available, by taking the CIPR offered by the trustee and adjusting the composition of the underlying products to meet their individual circumstances).”

The discussion paper said the proposed choice architecture was predicated on the fact that, generally, individuals were likely to be better off in retirement when allocating a percentage of their superannuation balance to a longevity risk management product than if they did not.

“Secondly, while there are differences between individuals at retirement, in one sense all retirees are homogenous in the important respect that they do not know when they are going to die and must manage their longevity risk. This is the case whether an individual has a short or long life expectancy (except for those with a terminal illness).

The discussion paper said that providing members with a guided choice upon retirement also

Take no action and remain in accumulation

Remove assets from the system (e.g. place in a term deposit)

sought to address the problem that individuals were facing complex financial decisions, a lack of guidance, and behavioural biases at retirement.

“Behavioural research and experience overseas indicates that a ‘default’ has a very good chance of being selected by individuals, given the prevalence of status quo bias,” it said.

“Under the CIPR framework, the trustee would design the CIPR so that the member receives a broadly constant income stream for life. This contrasts with the status quo of drawing down account based pensions where members can elect to drawdown income based on the government prescribed minimum drawdown rates or can choose an alternative (higher) draw down rate. Therefore, a CIPR could reduce the decision-burden for individuals, and would provide a greater role for trustees to guide their members.”

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RETIREMENT

Phases

Getting the best out of life’s sunset Paul Harding-Davis looks at the five retirement transition phases now that he is approaching the ‘sunset’ of his life.

1

978. The year I joined the industry. That must mean I’m now approaching the “sunset” of my life. Great news. I’m likely to have a very long time in “retirement”, and much of it high quality and independent. There can, however, be no ignoring the fact that at some stage some of it I may be frail and dependent.

How, what, and who will help me make this time one of the best phases of my life? It will after all likely be a third of my life.

I write this ref lecting on mine and my family’s experiences, together with what is now almost 39 fortunate years in this industry. I also input an eclectic range of reading and seminars from all of which I’ve formed a framework to help understand and manage the stages or transition points in this sunset period. The ‘Five Transitions Framework’.

Before I outline this though, some scene setting and assumptions will help with the conclusions.

My core premise is that by good planning and communication every transition is materially improved. Added to this belief is that a financial planner is the best placed person to be leading clients through these transitions, and helping bring in other specialist help where needed.

Most advisers already work with clients in this phase of life.

The financial elements of these transitions are important and need to be planned for and executed well and in no way do I want to minimise that, but the other dimensions – social, emotional, and physical – are in my view more important to a great series of outcomes in people’s lives.

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RETIREMENT

Phases

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Phases

Let’s start with the framework: RETIREMENT FIVE TRANSITION FRAMEWORK RETIREMENT FIVE TRANSITION FRAMEWORK

T1 Retirement T1 Entry Retirement Entry

T2 Managed T2 Independence Managed Independence

T3 Dependent T3 Independence Dependent Independence

T4 Dependent T4 Dependent

T5 Death T5 Death

Retirement entry

essential to have begun years prior and common It begins with retirement entry – which should language and understanding reached. Similarly, begin five years or more prior to retirement. dependent and death. The last two transitions This sets up managed independence.

From have the added common problem of denial by one T2 conversations should ideally start including or both if a couple.

FIVE HEALTHY TRANSITION the family. T3, or dependent independence, is Let’s unpack them a bit further.

T1 5 year transition program before retirement date emotional, social, 5 year transition activities, financial all program before need to be planned and retirement date carried out. social, emotional, activities, financial all need to be planned and carried out.

T2 T2

Physical prime of retirement.

Able to maintain home, travel, etc.

Physical prime of retirement.

Able to maintain home, travel, etc.

T3TRANSITION FIVE HEALTHY

T4

T3 In control.

Able to travel, drive, socialise.

Planned for: assistance In control. with physical Ablesome to travel, drive,and maintenance socialise. needs.

Planned for: assistance with some physical and maintenance needs.

T4 depends How positive on how well planned.

Can still feel in control Still Howsocial, positivementally depends active on how(most). well planned.

Levels of feel physical help Can still in control needed.

Still social, mentally Most facing or activeavoid (most). planning result ishelp Levels of–physical negative needed. phase.

Most avoid facing or planning – result is Involve family membersnegative - next genphase. and siblings Involve family members - next gen and siblings

T5 T5poor ability Society has to discuss.

Limited language framework.

Society has poor ability “At home with loved to discuss. ones”.

Limited language Heroic or military. framework.

Majority “At homedifferent. with loved ones”.

Heroic or military.

Majority different.

Source: Paul Harding-Davis

T1

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RETIREMENT

Source: Paul Harding-Davis

Phases

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RETIREMENT

Phases

Industry doyens like Owen Weeks and others have done great work on the years leading up to retirement. There are advisers who have had to help executives who have retired without the transition. Without the sense of purpose and activity it can lead to loss of enthusiasm, energy, and even mental health issues.

Public service notwithstanding, we are advising one of the first generations for a long active and financially strong retirement to be common.

In the 1980s, one of the most far-seeing authors, Charles Handy, wrote about the ‘portfolio life’. He described it this way: life provides four types of work – paid work, study work, philanthropic work and leisure work. A well-managed life has all four but in different balances at different phases.

Twenty-five years ago, this resonated with me and I have worked toward achieving this since. The family, FYI, I fit into the leisure work box.

This is one kind of language that can be used for the first transition. Having a language and framework to talk to all advised clients

(and family and friends) means you are ready to make a difference, differentiate yourself, and win new clients.

However it is done, I believe it takes in the order of five years for someone to get ready for the loss of regular work. Doubly so if the plan is, say to “move to the Sun”, or to somewhere less expensive. People need to spend years building new networks, new activities, and making sure their family is actively connected.

This is also the time of life when new purposes can be found. In the portfolio life, community and charity work can come to the fore. People have the time and energy to make an enormous contribution to some of their passions. A friend who retired from the fire service and is a passionate local rugby participant has for 10 years done a magnificent job of maintaining the ground. He is connected, active, and has a strong purpose.

Better plans and conversations about health can also be gold. In the late 70s and 80s, clients of financial planners who are asked will commonly say about their lives:

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RETIREMENT

Phases

“There are still a lot of old perceptions about how retirement villages, nursing homes etc used to be. Things have changed a great deal.”

– Paul Harding-Davis

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Phases

“I wish I’d looked after my health better when I was younger, and if you are surrounded by family and friends who love you in your last days the money doesn’t matter”.

There is a great deal of research into wellbeing which supports this. Of course, I do not mean to discount the role a base level of income and assets in retirement plays in the above, but extra money provides surprisingly little extra utility.

Managed independence

During T2, say the prime of the sunset, the conversations and planning need to start about the net transition to managed independence. I think this is the least well-handled stage. During this time – if a positive attitude and framework are in play then this stage of retirement will be healthier, more successful, and the fourth transition to dependence is likely to be more positive.

Dependent independence

The important point to emphasise is that despite not being physically safe or able to do everything they used to, they are still in control! They just need some

physical assistance. There are three ways this can happen. Outsourced to paid labour, taxis or Uber, family and friends, or move to a retirement village.

Dependent

There are still a lot of old perceptions about how retirement villages, nursing homes etc used to be. Things have changed a great deal. Whatever is possible or desired the conversation with the clients and ideally their families need to start at a stage where they are willing.

This is the major time of denial. Slowing down happens slowly usually, and fear and comfort zones creep in. In my experience, there comes a point where you can no longer have the conversations. The denial is too strong. Nonetheless this can still be a time of being in control, of some kinds of travel, of family and social activity. Changing ways of people too far into this is impossible.

As we get older our brains become less flexible and less able to change. The discussions cannot be left to happen until it is clear that it is time – or it is too late. I don’t need to tell financial advisers about estate planning needs but if not in place then

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RETIREMENT

Phases

problems are on the horizon.

At some stage, there will come dependence and frailty. Again, planning and conversations can still have a person having some sense of control. Most importantly it is already agreed by the individual with their family, friends and loved ones what their progression will be, where it will be and how they will work together.

Trying on very short and health dictated notice to find somewhere means a loss of control and an almost guaranteed sub-optimal outcome.

Death

And now to the final transition – death. As a society, we have poor language and skills regarding death. The only positive language is usually heroic or military: “They fought a brave fight”, “They fought to the end”.

Personal experience is that most people shy away from having the conversation and therefore from making plans well. Estate planning, funerals, memories etc.

Here again financial advisers are already actively involved, but I am advocating continued conversations to prepare clients and families.

Their outcomes will be better, the adviser’s outcomes will certainly be better. Satisfaction and personal fulfillment; financial due to referrals and new clients amongst the family make for a rewarding and valuable business.

Financial advisers go on a long journey with their clients. More and more clients are, like me, nearing their sunset or in it. How good a sunset will you and your practices help them plan?

Paul Harding-Davis is principal at PHD Management Consulting.

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INFLOWS AND

Outflows

Allocated pensions outflows increase by 97 per cent

A

llocated pensions outf lows increased by 97 per cent to $17.3 billion during the June 2017 quarter, compared to $8.8 billion in the March 2017 quarter, according to DEXX&R.

The research house found that allocated pension net cashflow had now been negative in the past four quarters.

DEXX&R managing director, Mark Kachor, told Money Management that the substantial outflows were a result of the 1 July superannuation changes taking effect, namely the $1.6 million transfer balance cap and the lower contributions caps.

While outflows were expected, such a large outflow number was not and Kachor pointed to the fact that there was not much member information on the retail side compared to industry funds.

“When you look underneath [the outflows], those that cater to higher net worth individuals like Macquarie are the ones with the biggest outflows.

What we think is happening is that those with balances higher than $1.6 million have been moving them out and also the lower contribution caps coming from the 1 July changes,” he said.

“There’s also a whole debate on how many accounts that were actually over $1.6 million.

Because data on the profiles inside individual retail allocated pension products is pretty scarce, there was also a lot of guess work on what was going to happen.

“Industry super fund, Australian Super said they only found 22 accounts that were over $1.6 million but that was to be expected as industry funds are not expected to have many high net worth members. On the retail side, there is far less information.”

He noted that it would be interesting to see the next quarter’s results and the level of inflows under the new tax regime.

The total funds under management/ administration (FUM/A) in the retirement incomes segment decreased by 2.8 per cent, $5.4 billion to $187.7 billion at June 2017, down from $193.1 billion at March 2017.

However, allocated pensions made up the majority of retirement income FUM/A, increasing 2.8 per cent, $4.8 billion to $175.6 billion at June 2017, up from $170.9 billion at June 2016.

Annuities made up the remainder of the retirement income market with an increase of 5.9 per cent to $12 billion during the June quarter, with Challenger Life dominating the space.

Of the top five allocated pensions managers, Commonwealth Bank (CBA) recorded an

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INFLOWS AND

Outflows

increase in FUM of 3.6 per cent to $43.4 billion, Westpac a one per cent decrease to $32 billion, IOOF an increase of 24.3 per cent to $13.7 billion, and AMP a 0.9 per cent increase to $30.2 billion in the June quarter.

Amongst the ďŹ ve largest retail and wholesale managers, NAB recorded a 9.4 per cent increase in FUM to $166.1 billion, AMP a 5.9 per cent increase to $156.8 billion, CBA a 6.2 per cent increase to $147 billion, Westpac a 9.3 per cent increase to $144.5 billion, and Macquarie a 21.8 per cent increase to $104.7 billion.

DEXX&R found during the June quarter, total retail and wholesale FUM/A increased by 1.7 per cent to $1.208 trillion, up from $1.19 trillion during the March quarter.

By Jassmyn Goh

Retirement income inflows and outflows $56 $46 $36 $26 $16

Billions Jul 13 Cash Inflows

Jul 14

Jul 15 Cash Outflows

Jul 16

Jul 17

Source: DEXX&R

$6

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MARKET

Projections

Retirement incomes market to reach $1.37 trillion by 2026

T

he retirement income market funds under management (FUM) is projected to grow at an annual average growth rate of 5.9 per cent to $1.37 trillion by 2026, according to DEXX&R. The research house found that the industry and public sector fund pension accounts were projected to have the largest growth over the next decade.

Industry fund allocated pensions FUM/administration projected to be $154 billion, 11 per cent of the total retirement income assets in 2026, up from six per cent in 2016.

60 50 40 30 20 10 0

Annuities

Retail AP

SMSF

Dec -16

Industry

Pub Sec

Dec -26

Public sector fund pension accounts were projected to hold $165 billion in total FUM, 12 per cent of the total assets in 2026, up from nine per cent in 2016. Retail allocated pension account FUM was projected to be $383 billion, 28 per cent of total assets, up from 23 per cent in 2016, and a further $22 billion was projected to be held in annuities.

However, DEXX&R projected that self-managed superannuation fund (SMSF) pension accounts would hold $645 billion in FUM, 47 per cent of the total retirement income assets in 2026, down 60 per cent in 2016.

DEXX&R also found that retail non-superannuation investments was projected to increase 9.7 per cent per annum over the next 10 years thanks to an expected outf low of funds from super as a result of the 2016/17 Budget super changes.

The research house said that retail FUM/A was projected to increase from $200 billion at December 2016 to $504 billion at December 2026.

It said this increase would be a result of the November 2016 super changes and the redirection after July 2017 of discretionary

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MARKET

Projections

contributions that would have previously f lowed into SMSFs, and to a lesser extend into personal super products. “Retail investment segment master fund and wrap platforms are projected to be the major beneficiaries of the increase in inf lows,� the report said.

Total super accumulation FUM/A was projected to grow at 6.3 per cent to $2.82 trillion at December 2026.

Within super, industry fund accumulation accounts were projected to increase to $913 billion in 2026 and account for 37 per cent of total assets in 2026, up from 34 per cent in 2016, employer super would account for 13 per cent of total assets in 2026 (up two per cent) and hold $329 billion, and personal super would account for 16 per cent (up one per cent) to hold $329 billion of total assets.

SMSF accumulation accounts were projected to hold $236 billion in FUM, and account for nine per cent of total

assets in 2026, down from 14 per cent in 2016.

By Jassmyn Goh

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