Industry funds snare retail member market share

Members have been turning away from retail and corporate funds in favour of industry funds, a Deloitte report into Australian Prudential Regulation Authority (APRA) superannuation fund statistics claimed.

Deloitte assessed APRA's superannuation fund statistics from 2004 to 2011 and found retail funds' membership had decreased by 200,000 accounts in 2011, while industry funds membership grew by more than 2.7 million to 11.4 million.

Membership fell from 3.3 per cent of the market to 1.7 per cent for corporate funds, and from 40.6 per cent to 33.7 per cent for retail funds. Industry funds membership, on the other hand, increased from 35.7 per cent to 39.6 per cent.

Retail funds still held the lion's share of super assets with 45.7 per cent of the market. However this was down from 53 per cent in 2004, while industry funds assets grew by 7.6 per cent to 31.7 per cent of market share over the same period.

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Although retail funds reported holding $352.7 billion assets in 2011, industry fund assets grew by more than 175 per cent to $244.3 billion, it said.

Partner in Deloitte Actuaries and Consultants, Stephen Huppert, said the statistics reflected the demographics of each fund type. Industry funds had younger members with little or no accrued super, while retail fund members typically had higher account balances.

The Deloitte report said that industry consolidation was not a new phenomenon: corporate funds had contracted 90 per cent from 907 in 2004 to 94 in 2011 while the industry fund sector had experienced 30 per cent rationalisation, decreasing from 79 funds in 2004 to 56 in 2011. Retail funds were down around 50 per cent from 219 funds in 2004 to 103 in 2011.

Operating costs and insurance premiums were also found to have increased by 80 per cent and 180 per cent respectively, across the board. Annual operating costs had increased from an average of $95 per member in 2003/04 to $144 per member in 2010/11, Deloitte said.

The group life insurance market had doubled over the past six years, most likely due to an increase in levels of insurance cover for members.