The consolidation in the superannuation industry could see the number of APRA-regulated funds shrink by almost 50 per cent in the next five years, according to Association of Superannuation Funds of Australia chief executive Pauline Vamos.
Speaking at the Financial Services Institute of Australia (Finsia) conference this week, Vamos predicted the number of APRA-regulated funds would fall from 286 to 150 by 2016.
“We will have significant funds – and I suspect AustralianSuper will still be the largest – but we’ll still have a lot of small, excellent boutiques,” Vamos said.
The forced account consolidation within MySuper would also drive a significant reduction in the number of member accounts, which currently stands at about two-and-a-half per member, she said.
The ageing population will see a change to asset allocations, Vamos added.
“At the moment, fixed interest is about 10 per cent – I think that will nudge 20 per cent, particularly if we get the corporate bond market opening. Infrastructure is at about 5 per cent, and I think it could move to 10 per cent,” she said.
She also predicted a decrease in the number of self-managed superannuation funds, and an increase in the superannuation pool from $2 trillion in the next five years.
One major risk for the industry was the increased leakage of money from the system, Vamos said – with the loss of contractors and self-employed Australians from the system a major concern.
A single proof of identity (through the Government’s planned use of Tax File Numbers for identification) would allow people to move around the industry more freely and would contribute to competition, Vamos said. As a result, there will be an increase in marketing spending by funds, she added.
The one “game changer” for Vamos was advice, which she said funds could use to capture and retain members.
“The average fund will provide advice. They will need their own advisers. I think the integration of those professions into the superannuation industry will be an enormous opportunity,” she said.
