The deputy chairman of the Australian Prudential Regulation Authority (APRA), Ross Jones has predicted that the number of superannuation trustee entities in Australia could number as few as 400 to 450 by June, next year.
Jones has told a seminar in China that rapid consolidation has been the most significant feature of the superannuation industry over recent years and acknowledged that the cost of compliance and increased prudential requirements such as licensing had been significant factors in this process.
Addressing a seminar on Chinese pension development, he said that over a ten year period the number of funds in Australia had fallen from over 5,000 to less than 1,200.
“And as I mentioned a moment ago, we expect around 400 to 450 funds by June 30, 2006,” Jones said.
However, he said that at the same time as consolidation had occurred, the volume of superannuation savings had more than tripled.
Looking at the impact of trustee licensing, Jones said that members of funds were increasingly reluctant to volunteer for what had become essentially a professional role and that employer sponsors were becoming more reluctant to involve themselves in the operation of an in-house scheme.
“The benefits of economies of scale become more significant in a competitive investment market, so funds are starting to merge and consolidate,” he said.
