What started as a quick look at the latest APRA annual fund-level statistics has turned into a super fund series, exploring scale, inflows, sustainability, and retirement. We finish off with a review of industry demographics, focusing on account size, age and gender. There exists large dispersion amongst funds along these dimensions and this creates challenges for the superannuation ecosystem.

Understanding inflow

Like in other recent articles, we aggregated data at an entity level and accounted for announced mergers. We cleaned data as best we could and removed some funds where we were not confident in data quality. We could not account for Mercer’s integration of BT Super accounts in this analysis.

Account dynamics

We analysed funds based on two dimensions, number of accounts and average account size. The figure below highlights the sizable dispersion that exists amongst funds.

The red lines represent averages. The average super fund has 306,000 accounts with a balance of around $90,000. However, most funds differ significantly from this average.

The bottom left corner of the chart could be considered an unsustainable zone. Funds in this zone must have a growth strategy for growing account numbers or balances, or better still, both. Most of the funds in the bottom right segment of the chart are below the $30 billion sustainable scale figure referred to by APRA. However within this segment, there are some funds which are growing member numbers quickly, primarily the platform-based offerings.

Account balance dynamics are a major informer of the split between account-based and balance-based fees. An additional consideration is that the admin fees applied in the Your Future, Your Super performance test are based off a lower than industry average of $50,000 balance. For many funds this could skew the fee structure decision to target fees which introduce a greater degree of member cross-subsidisation than appropriate.

Age and gender dynamics

The chart below details the age and gender spectrum for the industry. The red lines represent industry averages: we estimate the average age of a super fund member to be 44.5 years and the mean non-male representation to be around 47 per cent. Note that APRA collects data for gender categories ‘male’, ‘female’ and ‘intersex or indeterminate’, with 0.01 per cent in the last category.

The impact of underlying industry dynamics of some traditional industry funds is obvious, especially with regards to age (REST and Hostplus) and gender where NESS Super, Cbus, BUSSQ and Mine Super/TWU Super have a male-dominated membership while HESTA stands out as a fund with a large female representation in its membership.

At the top of the chart are some platform-based super funds which likely have a high ratio of advised members in retirement. Research shows that older consumers are more likely to have a relationship with a financial adviser. Newer entrants like Tidswell (with Spaceship as one of its underlying products), Future Super and Guild have targeted a younger membership with Guild also having the largest proportion of female members.

The dispersion in demographics across funds creates some interesting challenges. One is the choice of engagement mechanisms and communication approaches, where funds need to consider whether they tailor their approaches to match specific characteristics of their membership. There is also an interesting brand strategy challenge: can a fund with specific membership characteristics develop a brand suitable for a public offer marketplace?