In its latest Superannuation Market Projections report, Rice Warner said it anticipates a strong annual growth rate of above eight per cent.
The report expects retirement assets will grow to 39 per cent of total assets by 2028, and assets held in the retirement phase by industry funds will triple over the next five years.
It also said, however, that the industry is likely to face significant changes in coming years, both positive and challenging.
Rice Warner chief executive Michael Rice said the considerable amount of legislation, together with the reductions in concessions on contributions, means cash flows will alter substantively and the flow of funds between sectors will also fundamentally change.
The report said the May 2014 federal Budget would be unlikely to deliver further concessions for super, due to the outlays for the age pension and the disability support pension for older workers.
“A good outcome would be the status quo, but higher taxes on superannuation cannot be ruled out,” he said. Mr Warner also said the introduction of the MySuper legislation had been a catalyst for further consolidation in the industry in 2013, with the number of APRA-regulated funds falling from 4,474 to 325 in the past 15 years.
He expects that only 200 funds will remain in five years' time.
According to Mr Rice, MySuper and FOFA have led to lower fees for retail funds.
Built in commissions are now virtually extinct and fees have been set to compete against other MySuper products.
Many institutions have partially protected their profit margins by shifting to higher levels of indexed investments or by introducing lifecycle products which hold low-cost assets for most members with high balances, said Mr Rice.
He believes superannuation funds are only beginning to develop appropriate solutions for retirement.
“The key will be to provide advice to members approaching retirement and to match products to their personal needs,” he said.
“Many funds will need to redesign retirement products to help members deal with inflation and longevity in retirement.”
Mr Rice said the focus at the moment is mostly on liquidity for income needs.
