The review found SMSFs grew their share of total super assets under management (AUM) in the 12 months to June 2022 from 30 per cent to 31 per cent.

Over the longer-term, SMSF market share has remained largely stable, down just 3 percentage points over the past 10 years and 1 percentage point over the past five years.

This has come despite a notable shift in the broader competitive landscape.

Retail funds have continued to lose ground to peers, making up just 23 per cent of the market as at 30 June 2022 – down 1 percentage point over the past 12 months, 5 percentage points over the past five years, and 8 percentage points over the past 10 years.

Meanwhile, industry funds increased their market share by 4 percentage points over the year to 20 June, 12 percentage points over the past five years, and 15 percentage points over the past decade.

When assessed by number of accounts managed, industry funds have held a majority share for five consecutive years, growing their share by a further four percentage points to 56 per cent in the year to 30 June 2022.

However, retail funds reported the largest average contributions per member, up 40 per cent from $2,644 to $3,699, representing seven out of the top 10 funds for average voluntary contributions.

‘Mega’ funds dwarf peers

The KPMG report revealed that overall, market volatility contributed to a 0.5 per cent contraction in total super AUM over the year to 30 June 2022, from $2.8 trillion to $2.79 trillion.

However, the contraction was not broad-based, with ‘mega’ funds (the seven largest superannuation funds with AUM exceeding $100 billion) the only segment to record balance growth over the 12-month period.

Mega funds AMP, Australian Retirement Trust, Australian Super, Aware Super, CFS, Insignia, and UniSuper grew total AUM to $1.1 trillion (10.7 million accounts), more than triple the size of the next segment (funds with $50–100 billion AUM), which totalled $385 billion.

As at 30 June 2022, five superannuation funds managed AUM between $60–100 billion, with a $28 billion gap to the next largest fund ($32 billion).

Just seven funds manage AUM between $20–32 billion, with at least 29 of the 39 remaining funds managing less than $10 billion.

Linda Elkins, KPMG national sector leader, asset & wealth management, partly attributed the shift in the competitive dynamic to recent mergers, which included the merger between QSuper and Sunsuper to form the Australian Retirement Trust.

“Mergers, and the rise of the mega funds, are a continuing driver of change in the super landscape,” Ms Elkins said.

“Five more significant mergers took place in the year under review and nine other funds have now made merger or MOU announcements.

“The growth in the super sector was restricted to the largest funds, mostly due to that merger activity. The Australian super sector is becoming more clearly stratified by size of funds.”

The big end of town also dwarfed smaller peers on a net flows basis, with Australian Super alone taking in $25 billion over the 2022 financial year.

According to the review, just 14 funds recorded net flows above $300 million, with the remainder of funds experiencing low or negative flows.

‘Critical mass’ of retirees

According to KPMG, to attract and retain members, funds are increasingly investing in digital capacity, online offerings, and accumulation to retirement strategies — particularly off the back of the introduction of the Retirement Income Covenant.

“There is now a critical mass of retirees with a common unmet need – dealing with longevity risk and achieving a certain income for life,” Melinda Howes, KPMG superannuation partner, observed.

“APRA requires that by the end of June trustees will have undertaken an assessment of their products and strategies.

“Members are now ranking certainty of income as a first priority in super fund surveys and will be increasingly looking to their funds to advise them on deciding the most appropriate strategy.

“Consideration of longevity insurance solutions is now front of mind for many funds, given members’ desire for secure income. A number of funds have now created chief retirement officer roles, reflecting the market-wide shift in focus to retirement.” 

Retail funds continue to dominate the pension phase with 55 per cent market share.

However, industry funds and public sector trustees gained ground, growing their share to 31 per cent and 11 per cent respectively.