31 July 2008: Australia's superannuation industry is a multi-billion dollar battlefield according to Deloitte's Actuaries and Consultants latest analysis of the industry.

Deloitte partner Wayne Walker said, "The competition is already intense, and battle is being waged in the face of an industry changing shape under the combined impacts of the choice of fund legislation, the 2006 Federal Budget changes, and an aging population that is living longer."

Many argue that fund choice has been a non event, but Deloitte's actuarial modelling debunks this as a myth. Actual fund switches, reported at levels of 3%-5%, involve billions of dollars each year.

"And this is just the tip of the iceberg," said Walker. "Many Australians are exercising choice by remaining in their current fund when they change employment. They are choosing not to move into the default fund of their new employer which goes largely unrecorded and remains invisible."

In the report Analysis – A Multi Billion Dollar Battle, Deloitte Actuaries and Consultants took just one component of "visible" switching, and calculated that if industry funds reduced switching from about 2.5% to 1.25%, then by 2021 the industry funds would hold an extra 23% ($200 billion) of pre retirement assets, and an extra 48% (about $70 billion) of post retirement assets.

Said Walker, "Membership is both the battleground and the prize for superannuation funds.

"The key to success is product quality and the ability of a fund to engage effectively with its members and deliver tailored solutions to them.

"What we are observing, and what Deloitte believes will become more important, is that funds of all types will invest in improving their ability to engage with members. This will build relevance, and enable members to better tailor their super to meet their own individual needs."

As for "group" arrangements into the future, the twin pillars will increasingly be retail trusts and industry funds the report notes.

"A number of industry funds have rolled out advisory services, with phone based call centres to enhance their services to members. And all funds have offered, or soon will offer, access to a suite of post retirement services," Walker advised.

Wayne Walker
Partner, Actuaries & Consultants
Deloitte
Tel: +61 (0) 3 9208 6916
Mobile: 0419 390 436

Stuart Rodger
Partner, Actuaries & Consultants
Deloitte
Tel: +61 (0) 2 9322 5022