10-20% reduction in platform super options predicted

Mike Taylor

Managing Editor and Publisher

24 March 2026

The Australian superannuation industry is likely to witness the closure of at least 10% to 20% of platform options in the wake of the Shield and First Guardian collapses, according to new Mercer analysis.

The company’s 2026 Shaping Super analysis has pointed to platform superannuation products winning the battle for retirement account flows but, at the same time, has warned of increasing regulatory scrutiny with the Australian Prudential Regulation Authority (APRA) predicted to encourage a reduction in investment menus.

“APRA will require many platforms to review their investment menus and governance frameworks, likely leading to a reduction in options through stricter oversight,” it said.

“In practice, platform fund members are typically advised, with advisers intentionally accessing larger menus to combine options for better outcomes – considering these choices differently from the regulator’s perspective. Advisers are expected to navigate areas where quality may be challenged and address the more complex needs that may be unmet by traditional funds, such as for members in retirement,” the report said.

“Platform menus will likely continue to be complex (e.g. there are multiple Australian equity options on the menu offered by different investment managers). While some pruning is expected, for advisers, investment option selection is more nuanced. For instance, advisers may seek specific equity options that complement other investment options to optimise risk and return for their clients.

“Over the next year, platforms will need to balance oversight and governance with cost and capacity constraints. This will require platforms to be mindful of the expectations of the regulator being generally sector-agnostic, with deep option-by-option performance analysis (as is done by non-platform funds) being expected but operationally problematic. Through this, we expect platforms to focus on identifying underperforming options through a well-designed, risk-based approach.

“Consistent with this, we expect most if not all platforms to conduct deep investment menu and governance reviews over FY2025/26 and following these reviews, the closure of at least 10-20% of platform options through this program of work19. For example, one fund pruned 10% of its investment options in 2025,” the Mercer report said.

Importantly, the Mercer research points to the traditional measures of superannuation fund viability – expense ratios and investment returns – as having become less important to their survival.

It said that the strongest predictors of a fund’s survival over the past five years has been fund size and net account growth rates.

“Our modelling indicates that, on average, each percentage point increase in net account growth reduces the odds of a fund closing within the next decade by approximately 2%,” it said.

“Conversely, variables such as expense ratios and investment returns do not show statistically significant associations with fund exit. As a result, it is unsurprising that funds are increasingly viewing sustainability as an existential issue. Many have allocated substantial portions of their operating budgets to better understand their position and evolve their models accordingly.,” it said.

The research paper then pointed to what it described as the key components of fund growth and sustainability:

• Organic growth: through distribution channels such as direct, promotors, employer and advisers.
• Inorganic growth: primarily via mergers, which form a core part of many funds’ sustainability strategies.
• Member retention: to capture and hold the members that funds have worked hard to win.