“The challenge to meet stakeholder expectations is increasing. On the one hand, the industry continues to pursue a consolidation agenda with the promise to deliver scale efficiencies, and on the other, we are witnessing increasing expectations on strengthening administration and service arrangements,” Elkins said.
“Cost management will be key to managing sustainability challenges that are being faced throughout the industry. Considering how costs are managed ongoing is becoming increasingly important for super funds.”
Australia’s super assets grew from $3.5 trillion to $3.9 trillion in the year to June, and figures from APRA show the sector’s assets hit $4.2 trillion at the end of December.
The report showed not-for-profit industry funds expanded their share of the super pool in 2023-24, from 38.2 to 40 per cent, while industry funds’ share has swelled by about 10 percentage points in the past five years.
Another key trend in super has been the rise of “mega funds” (funds sized over $100 billion) – partly due to a spate of mergers.
The KPMG report highlighted the addition of Hostplus to the now eight-strong group of mega funds after reaching $115 billion in assets under management. Without making predictions for whether there will be more mega funds, Elkins said it was possible, especially with more mergers of mid-sized funds.
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“It’s the sort of movement you see in a more mature market as entities really think about their strategic intent and how they will best pursue that for their members.”
The eight mega funds are comprised of four industry funds, one public sector fund and three retail funds. A further six funds are sized between $50 billion and $100 billion, which was the same in the 2022-23 financial year, and there are twice the number of funds since the 2022-23 financial year that are now sized between $25 billion and $50 billion.
The merger between CareSuper and Spirit Super was the largest transaction last financial year, with the combined CareSuper having had a more than 150 per cent growth rate for assets under management and for members. It now has 590,000 members.
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