Inside Super

6 June 2025

Welcome to Inside Super, a brief and (hopefully) insightful and stimulating read about the forces at work impacting super funds, one that combines fact- and experience-based insights. The focus of Inside Super is on superannuation industry strategy, structure, scale economies, competition and growth, topics central to the work Right Lane Consulting has been doing for more than 25 years. We aren’t building the content from scratch; we’ve been writing about forces at work in the industry for 13 years in our annual, subscriber-only Forces at Work in Super Report. In each issue of Inside Super, we choose a chart or two from the back issues of the Report (there’s ~1,100 pages to draw from!) and connect them up with something that’s happening right now in, for example, the competitive arena or the policy discourse. We also make some observations and suggest some questions you and your team should contemplate.

Topic of this Inside Super

What’s your fund’s growth prescription, and what are anticipated the outcomes?

When we started studying market share movements (aka switching flows or net rollovers) in the mid-2010s, retail funds were taking share from industry funds. As we observed in our recent Forces at Work Report though, in the 7 years from 2017 to 2024, profit-to-member funds gained nearly $65bn in market share movements (see chart below). One of the greatest market share shifts I’ve ever seen has come to an end for the time being, as retail funds (mainly specialist retail platforms) have continued to take share and in FY2024 retail funds won more net rollovers than profit-to-member funds. This year, there were only 3 profit-to-member funds in the top 10 list of market share winners: AustralianSuper, UniSuper and Hostplus.

This doesn’t mean other profit-to-member funds aren’t growing, there being other sources of FUM growth (or decline): contributions flows, benefits payments, SFTs and investment and operating income. The outlook for contributions flows is good: workforce growth, higher SG, near full employment … but the other sources of growth may be looking slightly less compelling for your fund.

Funds are pulling different levers. The most progressive have a strong handle on the prospectivity and cost of each one, and are allocating resources accordingly. So, what’s your growth prescription and how are you making active, consequential choices to back it?

Please see examples of fund executives making the case for expenditure at the Hayne Royal Commission hearings (video link). I recommend watching Ian Silk’s authentic and masterful logic chain, starting at about 19:57 (the next 5 minutes or so). Nearly 7 years on (if you can believe that), with more data and better tools available, funds should be making the link between activity and outcome – quantitatively, where possible. They certainly appear to be required to stand behind the robustness of their decision making under the best financial interests duty in the SIS Act, and APRA regulation relating to strategic planning and member outcomes. The shift in the burden of proof in recent reforms may mean that trustees need to demonstrate that their decisions result in financial benefits for members.

 

Questions to contemplate

  1. A little over half of the remaining profit-to-member funds grew FUM above the total system average last year – all of the big 8, 4 small funds and no mid-size funds.
    – What is your fund’s FUM growth prescription? What combination of levers are you going to pull and what are the anticipated outcomes?

  2. Despite the dramatic market share movements of the last 7 years, only 5 profit-to-member funds have made the top 10 list of market share winners during that period, the ones mentioned above plus ART and Cbus.
    – Can you grow market share? – Do you know what are others doing that is working?
    – What is/can be your distinctive approach?

  3. The need to grow, and to do what is necessary to grow, remains somewhat contested. On 28 April, Super Review reported that a former member of the Superannuation Complaints Tribunal called into question the efficacy of the industry spending $423 million on advertising, promotions and sponsorships last year. According to Super Review, he said that money would be better directed towards improving service standards.
    – If this is a false trade off, can you show that it is?
    – Has your fund built a defensible case about why it is important to grow, and to spend members money to grow?
    – Can you show the link between marketing activity/expenditure and outcomes – intermediate outcomes like ‘gross new members in’ and ultimate outcomes such as a lower per member costs trajectory?

I hope you found this insightful and stimulating. I would appreciate any comments, which I will publish with or without attribution (your choice) with the next edition of Inside Super. With our 2025 Forces at Work Report having been recently released, we are in presentation mode. If you are wondering whether your organisation is a subscriber, and if so whether you can get a copy, or if you would like us to present some of the Report findings to your team, please let me know.

Want to know more? If you would like to discuss this article in more detail, please contact Dr Marc Levy: marc@rightlane.com.au