Retirement
1 in 3 Aussies considers a super fund merger positive
Following APRA’s admission that smaller super funds need to merge with larger firms to guarantee better member outcomes, new research has revealed that almost one in three Aussies considers a merger to be positive.
1 in 3 Aussies considers a super fund merger positive
Following APRA’s admission that smaller super funds need to merge with larger firms to guarantee better member outcomes, new research has revealed that almost one in three Aussies considers a merger to be positive.
Amid the recent wave of mergers and consolidation within the superannuation industry, Investment Trends has revealed that 27 per cent of members see merging with a larger fund as a positive outcome, compared with 11 per cent who see it as a negative.
This positive sentiment holds even if their super fund opted to merge with a smaller fund (21 per cent positive versus 11 per cent negative).
“There is a general view that engagement between Australians and their super fund is underwhelming, but our research shows that super fund members are very much engaged with current events, having strong opinions about their super fund’s strategic decisions,” said Bailey Hao, senior analyst at Investment Trends.
According to the research, for the 11 per cent of members who hold a negative sentiment about mergers, most are concerned about potential negative impacts on fees and returns.
Many are also worried about changes to customer service levels and how they interact with their super fund.
“Super funds that are in the process of merging, or thinking about doing so, will do well if they alleviate their members’ top concerns of potential increased fees and underperformance. But our research also highlights that branding plays a key role,” said Mr Hao.
While most members (78 per cent) are indifferent if their super fund were to change its name or logo post-merger, a large cohort (18 per cent) oppose these potential changes.
Last month, APRA deputy chair Helen Rowell said Australia currently has too many superannuation funds, with smaller funds needing to merge with larger firms.
Funds with less than $30 billion under management, Ms Rowell noted, cannot remain competitive, often charging members more for underperformance.
“The emerging industry view seems to be that any fund with less than around $30 billion in assets under management is increasingly going to be uncompetitive against the so-called ‘mega-funds’,” she said.
“While there will inevitably be debate about the threshold level of assets needed, we agree with the sentiment. Smaller, underperforming funds would ideally consider merging with a larger, better-performing partner rather than another small fund – especially one that is also underperforming.”
According to APRA data, almost 90 per cent, or 124, of the 142 funds in APRA’s fund-level superannuation data have less than $30 billion in assets.
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