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Superannuation is now very much super-sized.
At September 2021 there was $3.4 trillion invested in super, up 17.5% in just 12 months. That’s significantly more than the $2.5 trillion combined value of all the stocks on the ASX. And with 10% of everyone’s wages being added each year, Australia’s superannuation system is only going to get bigger.
There are also a lot of super funds. At 30 June 2021 there were 128 funds regulated by APRA (not including small APRA funds), although this number is predicted to fall significantly as the industry consolidates.
The 2018 Productivity Commission inquiry into superannuation, and the banking Royal Commission that followed, put the spotlight on underperforming funds. As a result, APRA has published heatmaps of fund performance and warned it’s prepared to put pressure on poor performers to merge or exit the industry.
Another consequence of the Royal Commission has been an outflow of members and their money from the retail superannuation sector to the not-for-profit sectors. This trend is highlighted in the latest list of 20 largest super funds.
The Productivity Commission also found that it can pay to be with one of the larger funds:
Evidence of economies of scale is compelling – larger fund size is strongly associated with lower average costs in the Australian superannuation system… Significant unrealised economies of scale remain. For example, annual cost savings of at least $1.8 billion could be realised if the 50 highest cost funds merged with the 10 lowest cost funds. The presence of these potential gains, particularly from further consolidation, reflects a lack of effective competition in the system.
So, collectively, Australians would be paying less fees if there were fewer, larger funds. But does that mean larger funds have delivered better performance and lower fees?
Scale benefits also manifest through increasing returns to scale. Net returns are positively related to size for not-for-profit funds. (No corresponding correlation was found for retail funds.) Stronger net returns among larger not-for-profit funds might be due to higher exposure to unlisted asset classes, but data limitations rule out strong conclusions. Larger funds do appear, however, to make better investment decisions within asset classes.
There is little evidence that realised economies of scale have systematically been passed through to members in the form of lower fees. Scale benefits may have been passed through in the form of member services or increases in reserves or offset by the costs of meeting new regulatory requirements. And not for profit funds, on average, might have passed through some scale economies by investing more heavily in (higher cost) unlisted assets and obtaining higher returns. Data limitations preclude firm conclusions about the form of pass through of economies of scale, and thus how members are actually benefitting and whether they are benefitting in a form they value.
Whatever your objectives, it pays to at least be aware of who the largest funds are as a point of reference when benchmarking your own super fund.
In the tables below you can find the 20 largest super funds, ranked according to the value of total assets under management and also by total members, as at 30 June 2021.
AustralianSuper remains the biggest fund on both counts, with assets worth $244.9 billion (up 29% in a year, and 2,468,216 members (up 4% in a year).
QSuper and Sunsuper (who will merge in 2022) are currently the 3rd and 5th largest in terms of assets but combined would be the 2nd largest in terms of both assets ($235 billion combined) and members (2,074,452 combined).
In terms of members, REST is the 2nd largest (1,846,992), and Hostplus is the 4th largest (1,303,176 – although this doesn’t include the approximately 92,000 members that merged from Intrust in November 2021).
Of the largest super funds, Equipsuper grew the most in terms of assets (up 109%) due to the merger with Catholic Super, while Spirit Super grew the most in terms of members (up 64%), due to the merger and rebrand between Tasplan and MTAA.
MLC, Retirement Portfolio Service (OnePath and ANZ) and IOOF shrunk the most in terms of both assets and members, by 15%, 10% and 9% respectively. All these funds are now owned by IOOF. AMP’s National Mutual Retirement Fund also lost 10% of members.
20 largest super funds (by assets)
|Assets rank||Fund name||Total assets ($ billion)||Total number of member accounts||Average member account balance||Growth in number of member accounts||Fund type||Members rank|
|2||Aware Super||153.6||1,123,049||$131,000||4%||Public Sector||5|
|6||Public Sector Superannuation Scheme||94.2||218,293||$431,000||-1%||Public Sector||21|
|7||Colonial First State FirstChoice Superannuation Trust||89.9||672,825||$133,000||-5%||Retail||12|
|9||MLC Super Fund||84.9||956,471||$86,000||-15%||Retail||6|
|10||Military Superannuation & Benefits Fund No 1||68.7||181,086||$379,000||0%||Public Sector||23|
|14||Super Directions Fund||64.9||854,727||$73,000||-5%||Retail||8|
|16||CSS Fund||61.6||105,726||$583,000||-3%||Public Sector||33|
|17||Wealth Personal Superannuation and Pension Fund||53.9||295,354||$181,000||-4%||Retail||16|
|18||Retirement Portfolio Service||38.2||761,840||$49,000||-10%||Retail||11|
|20||IOOF Portfolio Service Superannuation Fund||33.5||231,911||$142,000||-9%||Retail||18|
20 largest super funds (by members)
|Members rank||Fund name||Total assets ($ billion)||Total number of member accounts||Average member account balance||Growth in number of member accounts||Fund type||Assets rank|
|5||Aware Super||153.6||1,123,049||$131,000||4%||Public Sector||2|
|6||MLC Super Fund||84.9||956,471||$86,000||-15%||Retail||9|
|8||Super Directions Fund||64.9||854,727||$73,000||-5%||Retail||14|
|11||Retirement Portfolio Service||38.2||761,840||$49,000||-10%||Retail||18|
|12||Colonial First State FirstChoice Superannuation Trust||89.9||672,825||$133,000||-5%||Retail||7|
|16||Wealth Personal Superannuation and Pension Fund||53.9||295,354||$181,000||-4%||Retail||17|
|17||Mercer Super Trust||29.8||287,159||$99,000||18%||Retail||22|
|18||IOOF Portfolio Service Superannuation Fund||33.5||231,911||$142,000||-9%||Retail||20|
|19||National Mutual Retirement Fund||6.5||222,053||$29,000||-10%||Retail||48|