Retirement
Super mergers on the rise
The last 12 months of super mergers may have been the highest on record.
Super mergers on the rise
The playing field for small and mid-sized super funds continues to shrink.
According to KPMG’s latest Superannuation Transformation and Consolidation report, the 12 months to October 2021 saw a total of 15 mergers within the superannuation sector.
While the report noted that this represents the highest level of merger activity KPMG had seen in a single year, they added that this consolidation mostly consisted of smaller funds being absorbed into larger ones.
From 2020 to 2021, the average size of the transferring funds shrank from $38 billion to just $4 billion. Meanwhile, the average receiving fund jumped from $44 billion to $76 billion.

KPMG superannuation advisory partner David Bardsley said that the firm expects this trend in consolidation among smaller players in the sector to persist.
“Currently, many funds are faced with the challenges arising from a lack of scale – and they are proactively investigating possible merger options in order to improve outcomes for their members.
Mr Bardsley said that recent concerns raised by regulators like APRA over mergers between funds with less than $30 billion in funds under management would drive additional smaller operators towards mergers with larger funds.
“So-called bus-stop transactions are deemed less likely to deliver sustainable medium- and long-term benefits and mega-funds look to deliver on the promise of past consolidation transactions,” he said.
Speaking at a recent Financial Services Council webinar, APRA executive board member Margaret Cole said that the regulator doesn’t have a “rigid” view of what size a fund needs to be to compete with mega-funds but predicted that smaller funds would continue to be at a disadvantage.
“Any fund with less than $10 billion, without some other redeeming feature, will definitely struggle to stay competitive into the future,” she suggested.
That being said, Ms Cole said that APRA doesn’t want to see trustees rushing into poorly planned, sub-optimal or “bus-stop” mergers.
“Our view remains that trustees of smaller funds should ideally seek to merge with a larger, better performing partner rather than another small fund – especially one that is also underperforming,” she said.
KPMG’s latest check-in with the superannuation sector also raised concerns around how industry mergers are communicated to members.
The report found that only 20 per cent of merged fund members were aware that a merger had taken place.
Mr Bardsley said that there is a proven link between effective engagement with fund members and transaction awareness.
“Funds need to continue to build engagement across the entirety of their membership to build awareness of transactions and the potential impacts to their members,” he said.
About the author

About the author


Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more

Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more

Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more

Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more

Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more

Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more

Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more

Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more

Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more

Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more

Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more

Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more

Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more

Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more

Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more

Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more