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As has been widely anticipated, the past 12 months has again seen merger activity across the superannuation sector continue to increase. Many funds, particularly profit-for-member funds, have made announcements of intent to merge – with expectations of more to come, especially as the industry faces into new challenges brought about as a result of COVID-19. Together with the significant business model transformation underway within retail funds, these herald the beginning of a significant transformation era for the industry.

This report follows our 2019 report, Superannuation fund merger insights, and seeks to further explore the business transformations occurring across the superannuation sector – with an additional focus on retail funds, key changes observed and what it means for those organisations committing to significant change.

The pace of merger announcements in the superannuation industry has continued to rise – and it is estimated that over the next decade the current 217 APRA-regulated funds will have shrunk to 85, with a faster pace in industry than retail. Meanwhile, Australia’s major retail banks and diversified wealth managers have all announced significant overhauls of their business models, including two major retail banks confirming the separation/sale of their superannuation and wealth management businesses.

To support this rapid change, the imperative over the next few years across the superannuation industry will be for many funds to successfully deliver on the committed transformation and merger activity announced. Change of this magnitude must follow rigorous assessment of member outcomes – and to be delivered effectively, must be followed by robust due diligence and transition planning activity. The implications of getting it wrong at any stage of this journey are potentially severe and can only be avoided through considered planning.

KPMG has produced this overview of superannuation fund mergers and transformation to provide insights, and to help inform the thinking amongst industry participants considering their own transformation journey.

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