The Australian Prudential and Regulatory Authority (APRA) is the body responsible for banking, insurance and superannuation businesses in Australia. In the super space they are endeavoring to improve outcomes for super members by eradicating poor performing funds and improving transparency across the industry.
They have recently published “Heatmaps” to provide information for product comparison with the aim to pressure poor performers from the market. These heatmaps have been tied into the Government’s ‘Your Future, Your Super (YFYS) performance test. The first YFYS performance test only included information from the MySuper Heatmap. This year will be the first to include a broader range of products in a Choice Heatmap.
Together these Heatmaps will cover 60% of member benefits excluding defined benefit and self-managed super funds.
Scale is the magic bullet for super fund providers to lower administrative costs. APRA’s statistics show that funds with less than $10 billion of funds under management have admin fees on average of 0.57% compared to 0.33% for funds with more than $50 billion.
APRA focuses on three metrics for sustainability, member accounts, cash flows and rollovers. Those that fail these metrics and are under $10 billion in size are named. I’m not going to name them here, the message to take from all this is that most of these small funds are engaging in merger discussions.
There are currently 175 funds and industry experts are forecasting only 50 funds will be remaining by 2025. A list of current mergers from the Super Guide website is outlined below;
- First State Super + Vicsuper + WA Super + VISSF (rebranded as Aware Super)
- Equip + Catholic Super + BOC Super
- Tasplan + MTAA (rebranded as Spirit Super)
- LGIAsuper + Energy Super
- Hostplus + Intrust
- AustralianSuper + Club Plus
- Sunsuper + QSuper (rebranded as Australian Retirement Trust)
- Cbus + Media Super
- LGIAsuper + Suncorp Portfolio Services
- Hostplus + Statewide
- Australian Retirement Trust + Australia Post Superannuation Scheme (APSS)
- AustralianSuper + LUCRF
- UniSuper + Australian Catholic Super
- Hostplus + Maritime Super
- Christian Super and Australian Ethical
Advisers are in the box seat to assist those confused with which super fund is right for them. If you have an existing super and would like to compare the fees and features of another provider, we can do that and can also outline any consequences of a switch of provider with regard to tax or insurance etc.
Sam Martin CFP®
Authorised Representative (No 252676)