Speaking at a CIFR workshop in Sydney yesterday, Rice Warner senior consultant Michael Berg said fewer than 20 per cent of new super members take their other super money to the new fund.
Mr Berg was discussing the findings of Super Insights – Rice Warner’s analysis of data from 18 participating super funds with 9.1 million accumulation accounts and over 10 million records (including exits and pensioners).
“Our biggest surprise was just how badly most funds are doing in attracting money from new members,” Mr Berg said.
“Of course it should be almost everybody keeping their money in one or two places and avoiding to have to pay fees to multiple superannuation funds.
“It’s also varying considerably both by fund and by age group. We’ve been surprised by just how bad it’s been,” Mr Berg said.
In terms of “actionable insights” that trustees can take from the data, breaking the rollovers into age groups can help, he said.
“If funds have got two per cent of their 22-year-old new joiners bringing in money from other funds then actually they’re doing pretty well relative to the others,” Mr Berg said.
In many cases a 22-year-old simply won’t have previous funds to bring in.
“The flipside of that is if you’ve got five per cent of your 50-year-olds bringing in money from their previous fund then that’s a huge missed opportunity,” Mr Berg said.
Looking at merger activity in the super industry, Mr Berg said that for the smaller funds it is “a matter of survival”.
“Generally the biggest funds in the market are typically 50 to 100 times bigger than the smaller funds – sometimes more than that,” he said.
“Funds need to either have a clearly defined niche or have good scale or both, otherwise they’re going to be eaten.”
