Just 20 superannuation funds account for nearly 60 per cent of assets in the APRA-regulated Australian superannuation industry, but the Australian Prudential Regulation Authority (APRA) is predicting further industry consolidation.
The prediction is contained in APRA's latest ‘Insights' publication, in which it points to the impact of recent legislative and regulatory changes, including the reinstatement of temporary loss relief around superannuation fund mergers.
"Looking ahead, the reinstatement of temporary loss relief for fund mergers occurring between 1 October 2011 and 2 July 2017 under the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012, and increasing pressure on registrable superannuation entity (RSE) licensees to demonstrate scale efficiencies, are likely to encourage further consolidation within the industry," the APRA analysis said.
Pointing to the rapid growth of self-managed superannuation funds (SMSFs), the APRA publication also named industry funds as having increased their market share while corporate funds had continued to contract.
"There has also been further consolidation between industry funds and within wealth management groups, as the industry comes under increasing pressure to deliver the benefits of scale to its members," it said. "Overall, the outflow of funds from the APRA-regulated sector has continued, reflecting a significant shift towards the SMSF sector as well as an increase in benefit payments as a growing proportion of Australia's population enters retirement.
"As at 30 June 2012, the largest 20 superannuation funds measured by assets comprised six industry, 10 retail, three public sector and one corporate fund," the APRA analysis said. "Assets of these funds accounted for 57.3 per cent of total industry assets and 52.5 per cent of members of APRA-regulated funds."
