The superannuation industry has continued to undergo major transformation in recent years, impacting business models, ownership arrangements, operational frameworks, products and services and the number of participants that are left standing amid greater mergers and acquisitions (M&A).
According to KPMG’s recent Super Insights report, this period can be described as the “superannuation musical chairs” phenomenon.
“When the music stops, where will super funds and service providers find their place within this evolving landscape?” said Linda Elkins, national sector leader for asset and wealth management at KPMG Australia.
Following this period of immense change, the industry’s ability to adapt and evolve will ultimately determine its future success, Elkins described.
“2024 was a year marked by substantial regulatory, operational and market transformations. Superannuation funds face a future where strategic planning and adaptability are more important than ever,” she said.
Attracting and retaining members will be key issues in the future, KPMG stated, adding that it continues to observe a trend of funds doubling down on member acquisition and retention strategies via a range of targeted initiatives.
These include advertising, sponsorship and partnership arrangements, as well as marketing initiatives. Moreover, funds are engaging with members directly for greater retention, such as through social media and promotional activities.
“It is imperative that funds focus on specific acquisition or attraction strategies based on an understanding of fund membership cohorts and ensure that there is a pathway for the long-term retention of these members,” the report said.
Implementing robust cyber security measures is another critical focus for super funds moving forward, KPMG noted, particularly in the face of recent coordinated attacks on several funds.
“The importance of robust cyber security measures has been highlighted by recent cyber attacks on multiple funds. This has raised member expectations for advanced security protocols from their superannuation funds. Funds must provide multifactor authentication, encryption, real-time threat monitoring, and a proactive approach to cyber security,” the report said.
Total assets in the super system have grown from $3.5 trillion to $3.9 trillion as of 30 June 2024.
Over the FY2023–24 period, industry super funds widened their market share by 1.8 per cent, rising from 38.2 per cent to 40 per cent, the report found.
This came at the expense of self-managed super funds (SMSFs), which experienced a 2.1 per cent decline in its market share from 30 per cent to 27.9 per cent.
The number of mega funds – those managing over $100 billion – rose to eight in FY23–24, up from seven the previous year, with Hostplus being the latest addition to the mega fund club. Their collective market share increased from 58.5 per cent to 63.1 per cent.
