Mega-funds not necessary – survey

Most superannuation fund executives and trustees do not believe there needs to be a push towards the creation of large-scale superannuation funds, with a significant majority believing those regarded as being medium-to-large funds are big enough.

A survey conducted by Super Review and sponsored by Pillar Administration at the recent Association of Superannuation Funds of Australia (ASFA) conference revealed more than 70 per cent of respondents believed that medium-to-large funds — those with between $10 billion and $20 billion of funds under management (FUM) — were big enough to be sustainable.

What is more, the survey revealed that most respondents believed that mergers were only likely to be consistent with members' best interests if they delivered reduced fees and greater security for members.

The survey asked respondents what they believed was the size of a sustainable fund in terms of members and funds under management, with 71.2 per cent nominating funds with between 100,000 and 250,000 members and between $10 billion and $20 billion in FUM.

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Of those respondents, 36.1 per cent believed funds with $10 billion in FUM and fewer than 100,000 members were viable while a further 35.1 per cent believed those with $20 billion in FUM and fewer than 250,000 members were viable.

Importantly, only 5.3 per cent of respondents believed mega funds — those with over $20 billion in FUM and over 250,000 members — represented the most viable entities.

The survey findings have come as small-to-medium-sized funds such as LegalSuper and NESS have argued against scale being a primary concern, with NESS using a submission to the Productivity Commission (PC) to argue that efficiency should be a primary concern.