Super Guarantee hike leads to record $15.57 billion in employer super contributions

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Software spending strikes fresh high as Australian businesses update technology

SGC inputs up due to the recent increase to 9.25%.

SGC inputs up due to the recent increase to 9.25%.

Employers paid a record $15.57 billion into employees’ superannuation accounts in the third quarter of 2013, reflecting the rise in the Superannuation Guarantee to 9.25%, according to gross domestic product (GDP) statistics released today by the Australian Bureau of Statistics (ABS).

The data also showed record amounts poured into technology as Australian businesses sought efficiency gains.

DST Bluedoor, a leading global provider of IT solutions for the wealth management industry, said rapid growth in the nation’s retirement savings pool is forcing greater investment in technology by superannuation funds to drive product innovation and productivity gains.

ABS data reveal superannuation contributions made by Australian employers rose 1.2% during the September quarter to a record $15.57 billion from $15.38 billion in the second quarter of 2013. Contributions were up 4.6% from $14.88 billion a year earlier. Employer contributions include Superannuation Guarantee (SG), salary sacrifice and voluntary employer contributions.

Reflecting the rising importance of technology within the economy overall, the seasonally adjusted private software spend rose 1.6% to $3.07 billion in the third quarter of 2013 from $3.02 billion in the second quarter, and jumped 8.1% from a year earlier. The report also indicated that the IT spend has hit record levels for several quarters.

The ABS data has revealed national productivity, as measured by GDP/hour worked in seasonally adjusted terms, did not grow during the third quarter and was up just 0.9% from a year earlier, highlighting a lacklustre performance. The Australian economy grew 0.6% during the September quarter, to be up 2.3% from the September quarter in 2012.

Martin Spedding, Executive Director with DST Bluedoor, said the growth in superannuation savings would force wealth and asset managers to become more efficient, as they seek to keep up with greater regulation and rapid technological changes.

“The nation’s superannuation savings pool is rapidly rising in value, and we can expect it to reach $2 trillion in 2014, from $1.75 billion in the September quarter this year, driven by growing compulsory superannuation contributions and rising asset values. This is forcing superannuation funds, wealth managers and administrators to upgrade their technology solutions to seek efficiencies and automate manual processes,” said Mr Spedding.

“Over the past year, we’ve seen a rise in technology spend by superannuation funds and other financial service organisations and we expect this trend to continue. Indeed, financial service organisations are making solid productivity gains, unlike many other sectors of the Australian economy where productivity has fallen.

“Greater regulation of the superannuation sector through SuperStream regulation and APRA data reporting is only adding to the pressure on superannuation funds to upgrade their technology systems and become more efficient,” Mr Spedding said.

“The superannuation industry, like the banking sector, must improve the consumer experience. Investors are demanding more efficient delivery of financial information, real-time transacting and are using mobile devices more and more. Superannuation funds must meet these challenges in 2014 in order to stay competitive,” he said.

Mr Spedding said DST Bluedoor’s aim is to continue to deliver innovative software solutions for the financial services industry that helps clients grow revenues and significantly cut costs.

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