The debate over fund size rages on. It is well known former superannuation minister Nick Sherry was a big proponent of fund mergers and the decision by the Australian Industrial Relations Commission to specify what funds would be default funds under the federal government's award modernisation program cemented this.
While many smaller niche funds are clinging on, the recent announcement that Tower Australia had won the hotly contested AustralianSuper insurance contract only served to highlight the elephant in the room: bigger funds can garner benefits for their members that smaller funds simply can't.
Under the new arrangement, AustralianSuper members will save more than $48 million a year in premiums, with many of these savings being directed in significantly increased levels of cover to help address the issue of underinsurance.
The new arrangements include up to a 31 per cent increase in death and disablement cover for the same cost, default cover that includes a two-year income protection benefit and up to 10 times more death and disablement cover under the automatic acceptance levels up to $1.5 million.
"We are thrilled to have been chosen by AustralianSuper as their insurance provider and are looking forward to implementing the new arrangements to achieve better outcomes for their members," Tower Australia chief executive Jim Minto said.
"Bringing this through default cover is the new big wave."
According to a report in The Australian Financial Review, industry funds are increasingly using size and clout to negotiate better deals for members.
"Industry funds, while varying in their insurance needs because they cover membership with varying age and risk profiles, have been attempting to use their wholesale buying power to negotiate improved cover," journalist Duncan Hughes wrote in the report.
And many in the financial services industry agree with this viewpoint.
Perpetual chief executive David Deverall said in June that he believed consolidation was inevitable as a result of the "AustralianSuper effect on fund managers and the consolidation activity that was already under way".
In September last year, AustralianSuper general manager of business development Paul Schroder said is was inevitable industry funds would join together in cases where they did not have the scale to contain costs.
AustralianSuper chief executive Ian Silk foreshadowed the benefits of scale when he spoke to Investor Weekly earlier this year.
"It's not really about size, but what does it mean is that each of the insurers that we're engaging with will be really keen to win that contract and price keenly and accommodate our design requirements. What it comes back to is utilising our economies of scale in negotiations with service partners," Silk said.
And so while the debate over fund size continues, it seems members are winning with the benefits coming from larger funds undeniable.
"I think the industry is likely to become more concentrated over the next five years and we'll see a smaller number of larger funds," Silk said.