- Super funds are busy uplifting their business models to improve their operational resilience, as their size and importance continued to grow.
- Retail funds continued to enjoy competitive advantage in providing retirement services.
- Industry funds continued to dominate in accumulation, with overall market share growth of 1.8 percent, growing to 40 percent in FY24.
- Hostplus joined the group of mega funds, after seeing total AUM grow above $100 billion for the first time in FY24.
Major transformation programs and further consolidation is likely within Australia’s superannuation sector, as funds tackle significant changes to member demographics, stakeholder expectations, competition and regulatory scrutiny.
According to KPMG Australia’s latest Super Insights report, which looks at recent data from APRA[1] FY24 saw a per-member lift in operating costs across the industry compared to FY23, lifting from $230 to $237 per member.
As superannuation matures and plays a more significant role in the Australian financial services market, we expect disruption to continue in the medium term,” said head of asset and wealth management for KPMG Australia Linda Elkins.
“The forces at play are prompting changes to operational frameworks and governance arrangements, and will ultimately impact the business models that will remain in the industry. These changes are impacting both superannuation funds and their service providers.”
The report highlighted that member service expectations are changing, following scrutiny over the past year around cyber security breaches, as well as delays in the administration and payment of insurance claims.
“The challenge to meet stakeholder expectations is increasing. On the one hand the industry continues to pursue a consolidation agenda with the promise to deliver scale efficiencies, and on the other, we are witnessing increasing expectations on strengthening administration and service arrangements,” Ms Elkins said.
“Cost management will be key to managing sustainability challenges that are being faced throughout the industry. Considering how costs are managed ongoing, is becoming increasingly important for super funds.”
There are now eight mega funds with more than $100 billion in assets in FY24, up from seven mega funds the prior year. Hostplus reached $115 billion AUM and therefore meets the mega fund criteria for the first time. In FY24, the eight mega funds included four industry funds, one public sector fund (Aware Super) and three retail funds.
