The number of APRA-regulated registrable super entities (RSEs) with more than four members declined by 9.5 per cent from 367 to 333 over 2011/2012, the regulator said in its latest ‘Insight’ Superannuation industry overview paper.
This figure fell by a further eight, to 325 as at 31 December 2012, APRA said.
The most significant decline in numbers was in the corporate funds sector, while mergers between and within wealth management groups were driven both by rationalisation following intragroup mergers and by decisions to streamline fee structures, investment strategies and insurance offerings in readiness for MySuper, APRA stated.
The number of licensee RSEs fell from 225 to 209 during the 2011/2012 year, and fell further to 199 by 31 December 2012, the report said.
As at 30 June 2012, the largest 20 superannuation funds by assets comprised six industry, 10 retail, three public sector and one corporate fund.
Those 20 largest funds accounted for 57.3 per cent of total industry assets and 52.5 per cent of members of APRA-regulated funds with more than four members, APRA found.
Despite recent consolidation, APRA predicted further mergers to be driven by the reinstatement of temporary loss relief for fund mergers occurring between 1 October 2011 and 2 July 2017 under the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012.
RSE licensees are also under increasing pressure to demonstrate scale efficiencies, and will need to pay particular attention to the management of operational risks, especially data integrity risk, APRA said.
APRA highlighted data integrity, liquidity, risks arising in mergers, funding and solvency of defined benefit funds, and risk management as key supervisory issues.
APRA highlighted data integrity as a particular concern, saying RSE licensees had been slow to respond to calls for improvements in this area, “despite regular messages to the industry from APRA on the importance of data integrity in meeting obligations to beneficiaries”.
“Many RSE licensees appear reluctant to become engaged on this issue until presented with large-scale data problems, typically arising in transitions to new administration platforms or administrators,” APRA said.
However, the level of awareness about this issue has risen over the last 12 months with more RSE licensees taking a proactive and coordinated approach to data in terms of member details, benefit calculations, unit prices and insurance, according to APRA.
