Super a multi-billion battleground

Wayne Walker

Australian superannuation has become a multi-billion dollar battlefield in which choice of fund is playing a key role, according to actuarial and consulting firm Deloitte.

In an analysis released today, Deloitte partner Wayne Walker has disagreed with those who claim that choice of fund has been a non-event with respect to Australian superannuation, claiming that the company’s actuarial modelling suggests the opposite.

“Actual fund switches, reported at levels of 3 per cent to 5 per cent, involve billions of dollars each year,” he said.

Further, Walker claims that the 3 per cent to 5 per cent super switching represents only the tip of the iceberg, with many Australians exercising choice by remaining in their current fund when they change jobs — something that remains largely invisible.

He said the Deloitte analysis took just one component of ‘visible’ switching and calculated that if industry funds reduced switching from about 2.5 per cent to 1.25 per cent, then by 2021 industry funds would hold an extra 23 per cent or $2 billion of pre-retirement assets and an extra 48 per cent or $70 billion of post retirement assets.

The Deloitte analysis also looks at self-managed superannuation funds and suggests they will continue to grow and stand to become the largest sector in the superannuation industry.