Super Insights 2025

Regulators are focused on sustainability as super funds strive to maintain a viable business model and ensuring their expenditure aligns with members’ best financial interests. 

In line with this, APRA has announced its intention to run a stress test to assess risks across the financial system in 2025. Super funds are under pressure to deliver tangible financial benefits to members without compromising the robustness of the fund – balancing competitive performance with the sustainability of their operations.

Some super funds have faced operating model and administrative challenges and are prioritising efficiency and cost management alongside migration and transition activities. New business models, acquisitions, and private equity investments have brought further complexities to the industry. 

Merger activity has also reshaped the landscape over the last five years. These will  be closely watched for their impact on the value chain and member outcomes.

There has been a resurgence in retail entities, bolstered by new and enhanced capabilities (for some funds, this was a result of the evolution of their business model and ownership arrangements). Disruptive trends in marketing and distribution are also shaking up the sector.

Over the next decade, 2.5 million Australians are expected to retire, requiring funds to develop their retirement income strategies to ensure they are delivering strong retirement outcomes.

Funds will also need to provide retirees with access to risk management solutions, advice and education while keeping pace with technology, bringing with it management of increased cyber and financial crime risks. 

Superior retirement offerings are essential for attracting and maintaining member loyalty. Funds must address the risk of member attrition due to inadequate products, especially in the face of rising competition. This is further emphasised by increased trustee regulation and scrutiny over retirement offerings. 

Super funds are facing increased scrutiny regarding their capital and reserves as questions about their financial strength become more critical. Funds need to show they can handle economic shocks and protect member benefits, while ensuring they have the resilience to cover operational risks. 

A superannuation review involves a thorough evaluation of a super fund’s performance, governance, compliance, and member services. It aims to ensure the fund is operating efficiently and in the best financial interests of its members.

KPMG’s Super Insights provide comprehensive analysis and trends affecting the superannuation industry, though they may not include detailed data on every individual superannuation provider. It offers valuable insights to help drive strategic decisions for super funds.

As of 30 June 2024, the superannuation system’s total assets have grown to $3.9 trillion, up from $3.5 trillion the previous year, due to robust investment returns.

We label mega funds as those with more than $100 billion in assets under management (AUM). As of FY24, there are eight mega funds.

Over FY24, industry funds increased their market share by 1.8%, rising from 38.2% to 40%, largely at the expense of self-managed super funds (SMSFs).

The superannuation industry is experiencing accelerated changes across business models, operational frameworks, governance, and participant consolidation. Super funds must adapt to evolving market conditions, regulatory scrutiny, and sustainability requirements to maintain competitive positioning and member satisfaction.

Market volatility, driven by global economic headwinds and policy impacts, may result in less favourable investment returns for super funds. Funds need robust risk management strategies and diversified portfolios to mitigate potential negative outcomes and sustain performance.

The superannuation industry faces several regulatory pressures, including intense scrutiny over super fund expenditure, best financial interests duty (BFID), investment governance, member servicing, trustee board governance, and accountability. These regulations aim to ensure funds operate efficiently, prioritise members’ best financial interests, and maintain robust governance frameworks. Funds must ensure compliance and demonstrate robust governance to navigate these pressures while delivering tangible benefits to members.

The demographic shift to retirement necessitates funds to develop retirement offerings, manage longevity and sequencing risk, and enhance member services like advice and connectivity to related services. Additionally, funds must enhance digital services to meet the expectations of all demographics.