There were few surprises in the public sector funds arena, with the major NSW public service superannuation fund, State Super once again emerging as the largest entity in terms of funds under management.
State Super boasts just over $23.2 billion in funds under management and around 106,500 active members. Notwithstanding the NSW Government’s recent warnings that tighter budget conditions may see some trimming of the State’s public sector, this is unlikely to affect State Super’s position.
Once again, the two Federal public service superannuation funds — the Commonwealth Superannuation Scheme (CSS) and the Public Service Scheme (PSS), with combined funds under management in excess of $10 billion, rank as the next most significant public sector entities.
However, the status of the PSS/CSS is scheduled for change over the next 18 months, with the Commonwealth flagging last year its intention to close the existing scheme and introduce a fully-funded model from July, next year.
The driving force behind the Commonwealth’s move is accumulated unfunded lia- bilities estimated at around $9 billion.
The next largest public sector superannuation entity is Queensland’s Qsuper with total assets under management of just under $10 billion, of which the majority ($6.3 billion) is contained within the defined benefits account, compared to $3 billion in the accumulation account.
The Victorian State Superannuation Fund is the next largest public sector entity, with $8 billion in funds under management, followed by NSW’s Local Government scheme, with more than $3.5 billion in funds under management.
It is hardly surprising that with funds under management in excess of $23 billion, State Super (NSW) is not only the largest public sector superannuation fund, but also tops the list as the largest superannuation entity in Australia.
It is also of significance that if there is one common denominator linking Australia’s largest corporate superannuation funds it is that they have all sprung from public sector entities.
The top corporate funds in terms of both Funds Under Management and active membership are Telstra Super, The Commonwealth Bank Officers’ Superannuation Fund and Australia Post Superannuation.
There is also a common denominator linking those in the next tier of corporate funds — they have all evolved from either long-standing financial institutions or Australia’s major blue chip companies. Thus, we can see the likes of the Westpac Staff Superannuation Plan, the ANZ Australian Superannuation Scheme, News Super, BHP Billiton and BlueScope Steel.
What this year’s Top Super Funds survey tells us about the corporate superannuation arena is that the number of funds with relatively few members and relatively modest funds under management means there is still substantial scope for further consolidation within the sector.
This is something which has been recognised by the managing director of SMF Funds Management, Chris Kelaher, who in March and April announced that SMF had been appointed by both the Tasmanian-based Roberts Superannuation Fund and the Trust Company of Australia to provide service within the SMF Master Trust.
Kelaher, in announcing the moves, made clear that his company was benefiting from the recent increase in corporate superannuation outsourcing.
What is more, he says “the industry’s trend to consolidation continues unabated”.
The view that consolidation is likely to continue is shared by a number of industry commentators, albeit that most acknowledge that the primary catalyst has been the increasing level of Government regulation and oversight in the form of the Financial Services Reform Act and the licensing of superannuation trustees.
The commonly held view is that while many small to medium-sized corporate superannuation funds will continue to look at the outsourcing equation, this trend is likely to peak once the new trustee licensing regime is fully bedded down.
