High expectations for super consolidation in 2021

Consolidation to reduce costs is the most likely outcome for the superannuation industry in 2021, according to a survey by Calastone.

In a survey of Australian funds professionals, the firm found 73% expected the superannuation industry to see consolidation in a bid to reduce costs.

This was particularly the case for super funds in the $50 billion plus assets bracket which would create an increasing number of ‘mega funds’ in the industry.

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The Australian Prudential Regulation Authority (APRA) had previously forecast consolidation would likely be required going forward as larger funds were better able to provide good outcomes for members than smaller players.

While there was expected to be consolidation, almost half (49%) of respondents said there was still a possibility of new players entering the market if they could offer a technology-based platform.

“Despite the continuing drive towards super funds mergers, respondents predict there is still an opportunity for new technology-driven platforms to enter the market, offering superior, digitally enabled outcomes and investor experience to scheme members,” Calastone said.

“In line with this sentiment, respondents highlight the importance of delivering a better interface to members through investment in technology.”

A further 51% of respondents hoped there would be better choices made available to members, to avoid poor default funds. This was particularly pressing given the implementation of Your Future, Your Super measures which would see APRA rank super funds on their performance.

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Consolidation is great, except when advisers recommend it. :P

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