A Market Projections Report released by DEXX&R showed total funds under management for the retirement income market at December 2013 to be $454 billion, with $294 billion or 65 per cent held in SMSFs, $149 billion or 33 per cent in retail allocated pensions and $11 billion or two per cent in annuities.
DEXX&R said in the report that by 2023 it expects the segment of retirement income in SMSFs to rise to $503 billion or 57 per cent, the assets held in retail allocated pensions to be $366 billion or 41 per cent and for annuities to account for $20 billion or two per cent.
The report said that lifetime and term certain annuities have recorded strong growth in funds under management in the 12 months to December 2013.
Funds under management for term certain annuities accounted for $6.51 billion at December 2013, while lifetime annuity funds had $4.07 billion in assets under management.
Challenger Life continues to dominate the annuity market, according to DXX&R.
The report said risk markets have also seen year-on-year growth despite the fact “claims and discontinuances continue at historically high levels”.
It said individual lump sum in-force premiums are expected to increase from $5.7 billion at December 2013 to $17.25 billion by December 2013.
Group risk in-force premiums are projected to rise from $4.51 billion at December 2013 to $14.37 billion by December 2023.
According to DEXX&R there will be a short-term growth in in-force business, supported by premium increases on existing business, which will ensure the premiums charged better reflect the current claims experience.
“Over the longer term, the introduction of more restrictive policy terms and definitions will stimulate sales of profitably priced more affordable product to middle income Australians,” said the report.
DEXX&R also made projections of how the total superannuation market will grow.
It believes the market will increase at an average rate of 7.8 per cent per year up to $2,998 billion at December 2023.
Total funds under management held in SMSFs within the accumulation and pension phases will likely increase $543 billion up to $922 billion in December 2023, according to the report.
