It has arguably taken around 18 months, but our Super Review Top Super Funds survey has confirmed what the sporadic announcements and growing file of anecdotal evidence has been suggesting for some time — that Australia’s superannuation industry has experienced fundamental change and that change is ongoing.
Most of the change has been taking place in the corporate superannuation funds arena, where our data reveals just how many trustees have opted to outsource, either in part or in whole. However, there has also been some consolidation in the industry funds arena.
What is important, however, is that most analysts believe that the consolidation will continue.
The main driver for this change has clearly been the tougher regulatory environment which has confronted trustees, but there has also arguably been the question of competition in an environment where choice of fund looms large.
Then, too, there is plenty of evidence to suggest that almost two years of negative returns up until late 2003 acted as a catalyst in the minds of many trustees.
The winners, as we have stated elsewhere in the edition, have been the master trusts, particularly those which can offer an end-to-end solution.
Ultimately, however, the Super Review Top Super Funds survey reveals that the big have become bigger and that those funds connected to the public sector look the most healthy.
Indeed, 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 also tells us about the corporate superannuation arena is that the number of funds with relatively few members and relatively modest funds under management suggest that 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”.
Where industry funds are concerned, there has been plenty of evidence over the past 12 months that they can more than match it with the master trusts and that the scale and level of service offerings from the likes of REST, HESTA and Unisuper makes them formidable competitors.
The survey also points to the corporate superannuation outsourcing phenomenon, making life interesting for the administrators, asset consultants and actuaries — something which Super Review will investigate in its June edition.
