This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print page

Superannuation snapshot: facing up to 2013 – what the numbers tell us


5 March, 2013: The Australian Prudential Regulation Authority (APRA) 2012 fund statistics provide a snapshot of the state of the $1.4 trillion Australian superannuation industry as funds face up to 2013 – the year of Stronger Super, MySuper, SuperStream, and the FOFA reforms.

The breakdown of the $1.4 trillion at 30 June 2012 (according to the APRA Annual Report) in billions was:

Corporate 56.1
Industry 267.3
Public Sector 222.7
Retail  371.4
Other 42.2
SMSF 440.9
Total 1400.6

The 2012 APRA statistics examined here exclude the hundreds of thousands of primarily small Self Managed Super Funds (SMSFs), and a small number of funds showing nil returns or in the process of winding up.

Funds competitively seek a differentiator

The 230 funds, representing 30 million member accounts, with more than $795 billion in net assets focused on here show that the FY12 shift from corporate and retail funds to industry funds has continued into FY13. And although industry fund account balances remain lower than their competitors, their growth in assets accelerated more than 6% over the previous year.

As the market continues to become more congested and market share reduces, the pressure to find a differentiator has increased. This has led to a wave of new lower cost products. “We expect to see further, quite radical shifts in product design as the MySuper products are launched this year,” said Deloitte Actuaries and Consultants Partner, Wayne Walker.

Mr Walker along with Deloitte Superannuation Partner Stephen Huppert analysed the APRA numbers and noted that retail products, freed from embedded advisor fees, are now able to be much more aggressive competitors on price, as well as on services.

Mr Walker said: “Institutions are also actively looking at how to transition members into retirement income products – something that will become increasingly important as the population ages.”

Funds are spending more on insurance

“A trend in the industry is the amount being spent on insurance for each member. For instance insurance costs per member in an industry fund increased by more than 20% in 2011/2012 and by more than 50% over the three years 2009/2012,” Walker said.  A similar trend is observed with retail funds.  Mr Walker said that many of Australia’s largest industry and retail funds have worked hard to encourage members to take out more insurance to meet this shortfall.”

“There have been increases in basic levels of cover and the introduction of more and more income protection policies,” Walker explained. “We believe that much of the increased costs can be attributed to these factors and this is confirmed to some extent by the much lower increases in corporate funds where comprehensive insured benefit programs have been a feature for many years.”

Table: Insurance Premium per member (see the table in downloadable version of the media release)

… And funds are likely to also pay more

Group insurance profitability has been under pressure and falling over the period up to 30 June 2012.

Mr Walker said: “This reflects a number of factors including the pricing pressure that was well observed in tenders over this period. The financial pressure has become quite strong and has been compounded by still lower margins and greater volatility in disability income insurance.”

The following graph illustrates what has happened. (see the graph in the downloadable version of the media release)

“The specialist group insurers are under the most pressure and we would expect to see rates firming up during the next tender cycle. This has already been foreshadowed by insurers,” said Walker.

A world of fewer … and larger funds

Mr Huppert pointed out that in 1995 there were more than 5,000 large super funds, most of them Corporate. “However by 2004 APRA only listed around 670 funds, and eight years later we are down to just over 200 funds.”

“Now the uncertainty around Capital Gains Tax (CGT) relief has been clarified – it caused a slight slowdown in consolidation in FY12 – we expect to see more consolidation this year now that CGT relief has been extended to 2017.”

“This together with the introduction of a scale test under Stronger Super, and the prospect of much more stringent oversight of fund operations will lead to further consolidation in the industry,” Mr Huppert said.

Market shares are changing

Table: Market Share (see the table in downloadable version of the media release)

The Deloitte analysis found that market share of Industry, Retail, Corporate and Other funds changed over the eight year period by member account numbers and by assets. APRA classifies ‘Other’ to include Public Sector and Eligible Rollover Funds (ERFs). The ERFs are largely built up by super funds unilaterally transferring small, lost and inactive accounts. At 30 June 2012 ERFs were more than 4.7 million accounts in aggregate, many of which are very small.

“The official commentary on the Stronger Super reforms questions the value of these Eligible Rollover Funds and we also ask whether these funds have now passed their use by date,” said Huppert.

Insights from cash flows

Table: Non-investment cash flows (see the table in downloadable version of the media release)

Stephen Huppert added: “In 2012, contributions rebounded to reach their highest level since the global financial crisis. However the current concern is the caps imposed by this Government on older Australians contributing up to $25,000 into their superannuation accounts at the concessional tax rate.”

“Superannuation is a long term investment for each and every Australian and the industry is lobbying the Federal Government to consider the long term view to provide confidence to the millions of Australians facing retirement (whether voluntary or forced) over the next few years,” Walker said.

“Whilst we do applaud the progress made in reducing the number of accounts in super funds, the concessional contribution limit of $25,000 falls short of undertakings given in the past by both major parties and ignores the fact that the overwhelming majority of Australians are retiring with benefits totally inadequate to provide even a moderate lifestyle,” Huppert said.

Many Australians facing retirement have not been able to contribute in the past and relied on the ability to ‘catch-up’ by making additional voluntary contributions in years preceding their retirement Huppert explained.

Operating costs in super are increasing

“Operating costs also continued to steadily increase in 2011/2012 and have,  for the first time, reached an annual average of $150 per member – just over 6% more than in 2010/2011,” said Walker.

Table: Operating expenses in more detail (see the table in downloadable version of the media release)

Deloitte believes that operating costs are best analysed as a dollar amount per member, notwithstanding the preference of many to express them as a percentage of the account balance.

Mr Walker explained the increase in operating costs can sometimes be masked by the increase in average account balances if costs were expressed as a percentage of account balance.

Table: Operating costs per member (see the table in downloadable version of the media release)

Mr Walker said: “All the increases in operating costs per member that are documented have occurred before the serious work of responding to Stronger Super and other Government reforms really gets under way. We believe that operating costs will continue to increase over the next two to three years.”

Mr Walker and Mr Huppert pointed out the following points on operating costs:

  1. The operating costs of the three fund segments - industry, retail and corporate - vary greatly. There are many reasons for this including the different levels of service offered to members. Some funds provide extensive services, which is one reason why we would expect average retail and corporate fund costs to be higher. Costs also depend on the complexity of the benefit which is more of an issue with corporate and retail funds.
  2. Operating costs in industry funds increased by more than 9% to $103 per annum, and retail funds by more than 8% to $268 per annum. In contrast corporate fund costs held fairly level.
  3. It is dangerous to stereotype, as the actual annual costs of individual funds can rise well above $700 per member. Funds classified by APRA as retail, industry as well as corporate are in this group.

NB: See our media releases and research at

Follow us – @DeloitteNewsAU

Last Updated: 


Wayne Walker
Deloitte Australia
Job Title:
Partner, Actuaries & Consultants
Tel: +61 3 9671 6916, Mobile: 0419 390 436
Stephen Huppert
Job Title:
Partner, Actuaries and Consultants
Tel: +61 3 9671 7778
Louise Denver
Job Title:
Director, Corporate Affairs & Communications
Tel: + 61 2 9322 7615, +61 414 889 857




Follow us


Talk to us