Looming reality – 2 super funds will control $1 trillion

Mike Taylor

Managing Editor and Publisher

22 March 2023

Barely six months after the Assistant Treasurer and Minister for Financial Services, Stephen Jones referenced concerns about superannuation funds emulating the banks by becoming too big to fail, the Australian Retirement Trust (ART) has revealed a $500 billion funds under management (FUM) target.

ART, which yesterday confirmed moves to merge with one of the last remaining large corporate superannuation funds, Alcoa Super, revealed its ambition was to grow to $500 billion in FUM by 2030 – just seven years.

The target set by ART also needs to be weighed against that of Australia’s largest superannuation fund, AustralianSuper where its chief investment officer, Mark Delaney in December, last year, said it was forecast to increase its member assets under management to $500 billion in the next five years.

That means that in little more than the next half-decade the two largest superannuation funds will control more than $1 trillion in funds under management (FUM) when, today, total Australian superannuation assets stand at just over $3.3 trillion.

The forecasts also come as the overall number of superannuation funds in Australia continues to decline through the merger processes being propelled in part by Government policy and the position adopted by the Australian Prudential Regulation Authority (APRA).

The accelerating nature of superannuation fund mergers was reinforced yesterday when, while announcing the merger with the Alcoa fund, the ART stated that since February, last year, it had completed two successor fund transfers, nine member consent transfers and announced several large corporate super transitions including Woolworths Group, AvSuper and Commonwealth Bank Group Super.

At the same time, AustralianSuper is moving to complete its merger with LUCRF after completing its merge with ClubPlus with further merger announcements believed to be in prospect.

At the same time, the number of major corporate superannuation funds in Australia continues to decline with the impending merge of the Alcoa fund leaving only the likes of Telstra Super and Qantas Super.

The likelihood that two major superannuation funds will account for $1 trillion in funds under management within around half a decade gives resonance to the minister’s comments from last year when he said he did not want to see a replication of the banking sector which is dominated by the big four.

Worth noting in the discussion around just two funds controlling $1 trillion is the fact that the current market capitalisation of National Australia Bank (NAB) is $88.51 billion while the market capitalisation of the Commonwealth Bank is $164.05 billion.