A focus on growth, and on consolidation
The superannuation industry in Australia has continued to evolve through the 2023/24 financial year, marked by significant growth and consolidation. The total assets of the industry surpassed $3.5 trillion by June 2023, with the largest ‘mega-funds’ now exceeding $100 billion in assets and 1 million members. This growth trajectory is underscored by a strategic focus on mergers, with at least seven fund mergers completed or expected by 2024/2025, reflecting a broader industry trend towards fewer, larger funds.
The consolidation trend is partly driven by competitive pressures, as smaller funds find it increasingly difficult to compete with mega-funds. This was highlighted by then APRA Deputy Chair Helen Rowell back in 2021, who noted that funds with less than around $30 billion in assets would be increasingly uncompetitive against the mega-funds. This benchmark has since risen, with medium-sized funds now targeting $50 billion through organic growth and mergers. As of 30 June 2023, there were 17 superannuation funds with Funds under Management (FUM) over $50 billion, with the four largest being industry or ’profit to member’ funds.
The Superannuation funds with FUM over $50 billion as at 30 June 2023 are: AustralianSuper $311.5bn, ART $264.4bn, Aware Super $163.8bn, UniSuper $127.4bn, PSS $109.7bn, Hostplus $97.0bn, CFS First Choice $88.7bn, CBUS $86.3bn, Military Super Fund $84.6bn, MLC Super Fund $82.2bn, HESTA $78.6bn, Rest $77.4bn, Mercer Super Trust $66.1bn, CSS $63.0bn, Asgard $67.2bn, AMP Super Fund $56.2bn, Wealth Personal Superannuation and Pension Fund $55.6bn
Source: Annual Fund-Level Superannuation Statistics, APRA, 2023
The Australian Retirement Trust (ART) saw the highest total growth in dollar terms from 2020 to 2023, largely due to the merger of Sunsuper and QSuper. In contrast, other large funds like Hostplus and AustralianSuper demonstrated significant organic growth, indicating robust internal capabilities to attract and retain capital.
Member retention and the enhancement of member experiences have become critical, especially in the context of the stapling requirements that limit automatic new member inflows from employers. Funds are increasingly investing in digital solutions and member education to improve engagement and retention.
The industry is also focusing on the retirement phase, spurred on by regulatory changes and demographic shifts. The government's introduction of the retirement income covenant and ongoing discussions around retirement income products highlight the sector's pivot towards addressing the needs of an ageing population.
Regulatory changes have been another focal point over the past year. The expansion of the financial reporting and auditing requirements, the upcoming commencement of the Financial Accountability Regime, and updates to several prudential standards are reshaping the governance landscape of superannuation funds. These changes aim to enhance transparency, accountability, and member outcomes but also bring new challenges that funds must navigate.
Looking ahead, projections using WTW’s Fund NavigatorTM model suggest significant shifts in fund rankings over the next five years, driven by organic growth and potential mergers. AustralianSuper is expected to remain the largest fund, while others like HUB24 are anticipated to climb significantly in the rankings. This dynamic environment presents both opportunities and challenges for funds as they strategise for future growth and member satisfaction.
The superannuation industry is at important juncture, with growth, consolidation, regulatory changes, and a shifting focus towards retirement readiness defining the current landscape. As funds adapt to these changes, the overarching goal remains to enhance value and outcomes for members, ensuring the industry's resilience and relevance in the years to come.
To explore in more depth, we invite you to view WTW’s full complimentary 2023/24 Superannuation Financial Year in Review available below.
| Title | File Type | File Size |
|---|---|---|
| 2023/24 Superannuation Financial Year in Review – Australia | 2.7 MB |
