The changing regulatory and political landscape continues to shift in favour of superannuation industry consolidation with increasing merger activity. We provide an overview of superannuation fund merger insights to help inform the thinking amongst industry participants considering merging with another fund.
In the past year, increasing numbers of superannuation funds have initiated informal and formal merger discussions. Merger discussions are likely to further increase in 2019 as both the regulatory and political landscape continue to shift in favour of consolidation.
2018 is likely to go down in the annals of Australian superannuation history as the year that sowed the seeds for the most significant transformation of the industry in a generation. Whether the Royal Commission into Misconduct in Banking, Superannuation and Financial Services (“the Royal Commission”), the Productivity Commission’s review of the efficiency and competitiveness of the super system, or changes announced in the 2018 Federal Budget, all are likely to influence the industry landscape for years to come.
Perhaps the most significant outcome of this myriad of inquiries, reviews and proposed changes to superannuation will be a major consolidation of superannuation funds through fund mergers. Currently there are 24 corporate funds, 18 public sector funds, 38 industry funds and 118 retail funds regulated by APRA1. In the 2018 Super Insights Report, KPMG projected that the industry would halve through industry consolidation over the next decade.
Due to the inquiry findings, recommendations and proposals made since this projection, KPMG believes this level of industry consolidation may occur sooner than previously forecast. A number of tailwinds supporting industry consolidation have developed, or increased in likely impact, over the past year and are worthy of note.
KPMG has produced this overview of superannuation fund mergers to provide insights and to help inform the thinking amongst industry participants considering merging with another fund.