Fewer but bigger industry funds now dominate super

Mike Taylor

Managing Editor and Publisher

21 April 2023

Just months out from trustee-directed superannuation products facing the performance test, new analysis has confirmed how industry superannuation funds are increasingly dominating the market via mergers and at the expense of retail master trusts.

According to new analysis conducted by WealthData many of the retail master trusts may struggle to deal with the performance test environment in circumstances where they are now almost uniformly much smaller than industry funds.

The analysis shows that amid ongoing mergers there are now only 26 industry fund entities compared to 77 retail entities, and that the average industry fund is now almost five times larger than the average retail master trust.

Experience with the Your Future, Your Super performance test as it applies to MySuper products has shown that scale has often proved a vital element for superannuation funds, particularly in their ability to deliver lower fee structures.

The WealthData analysis shows that while key expenses have been reducing across all types of funds, industry funds have been leading the way and increasingly so as a result of the scale benefits delivered by mergers.

Where net contributions are concerned, the analysis points to industry funds having taken the lead since around 2012 with the gap widening after 2016 particularly following the impact of the Royal Commission on consumer perceptions of retail master trusts.

The analysis finds that industry funds now account for 33% of total funds having grown from 22% in 2016, while retail master trusts have declined to just 20% of the market over the same period.

It said that self-managed superannuation funds had remained steady at around 26% of the market.

The performance test applying to MySuper products has already resulted in multiple mergers and exits on the part of failed funds.