Industry funds have emerged as the most predictable sector of the superannuation industry, with the largest funds having increased significantly in size while a number of small-to-mid size entities have merged with larger funds.
When industry funds are measured by assets, UniSuper stands head and shoulders above the pack with more than $10 billion in funds under management. But when it comes to total membership, it is the retail industry’s REST which boasts leadership with more than 1.3 million members, more than 100,000 up on last year.
Not surprisingly, therefore, when both funds under management and active membership are taken into account, REST emerges as arguably Australia’s most powerful industry fund with nearly 771,000 active members and around $6.1 billion in funds under management.
UniSuper boasts only a little over 208,000 active members.
What is becoming clear from the Top Super Funds survey is that even in the industry funds sector, there is still scope for further consolidation with funds with fewer than 10,000 members and less than $300 million in funds under management seeming most likely to succumb to the growing regulatory and competitive pressures.
In terms of size with both funds under management and active membership being the key determinants, the big six are REST, C-bus, Hesta, UniSuper, Sunsuper and the Superannuation Trust of Australia.
At the same time as growing organically, REST has been making an impression in the superannuation outsourcing stakes via its vehicle Acumen Super which boasts more than 14 clients and assets in excess of $150 million.
However, what is clear from the industry fund data is that size is not necessarily a prerequisite for growth by way of competing in the corporate superannuation funds outsourcing stakes. Indeed, it has been the mid-size players such as Equipsuper which have been making inroads in this area.
Equipsuper announced in early January it had picked up the Ansell and South Pacific Tyres employee superannuation funds, taking its funds under management to more than $2 billion. This followed on from those of NSW manufacturing company, Lincoln Electric, South Australian community services organisation, Minda, Patrick Corporation subsidiary, Holyman and the Melbourne Cricket Club.
Also among the mid-size industry funds competing in the corporate superannuation outsourcing arena are Sunsuper, the Superannuation Trust of Australia, the Australian Retirement Fund and CARE.
Commenting on REST’s strong position within the industry fund sector, the fund’s acting chief executive, Damian Hill attributes much to the fact that the fund managed to remain in positive territory and that this, in turn, generated “positive press”.
As well, he says there has been a significant upturn in the number of employers coming to the fund — something that is in part attributable to that positive press.
Discussing the contribution made by Acumen, Hill says that while it has not added a significant number of members, those members it has attracted have proven to be higher net worth individuals.
By comparison with the corporate superannuation arena, the industry superannuation fund sector has remained remarkably stable over the past 12 months, although there has been some consolidation, with most recently, the Hardware and Timber Industries Superannuation Plan being merged with the Primary Superannuation Fund.
In similar fashion to the consolidation occurring in the corporate super funds sector, the mergers and other changes occurring within the industry funds sector is being driven by factors such as the trustee licensing and the increased regulatory burden created by the Financial Services Reform Act.
