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Small and medium super funds face sustainability challenges

New analysis by the Australian Prudential Regulation Authority (APRA) has found that smaller superannuation funds are more likely to struggle to deliver quality, value-for-money member outcomes into the future.

Analysis of the sustainability1 metrics in the 2021 MySuper and Choice heatmaps2, published today, confirms the importance of scale as a driver for long-term member outcomes. 

APRA’s findings show that large superannuation funds (with assets of more than $50 billion) can more easily spread their costs over a wider membership base to keep their fees lower. Notably, administration and operating expenses for large funds are significantly less than that of small funds (with net assets less than $10 billion) – 0.33 per cent of net assets compared to 0.57 per cent.

In contrast, APRA found that half of small funds faced immediate sustainability challenges due to declining net cash flows and member accounts, while more than half of medium-sized funds (with $10 to $50 billion net assets) have adverse trends in sustainability.

APRA’s analysis also highlights the benefits of mergers and simplification programs in improving financial outcomes for members:

  • Mergers since the release of the first MySuper Heatmap in 2019 have delivered a combined total fee savings of around $21 million per annum to approximately 350,000 MySuper member accounts (or $60 per account). 
  • Simplification programs, including product consolidations, have delivered fee savings to approximately 780,000 member accounts, with estimated total savings of almost $16 million per annum (or $20 per account). 

APRA Member Margaret Cole said the findings prove that size matters when it comes to boosting financial outcomes for super members.

“Superannuation is a long-term investment, and how funds are placed to perform into the future is just as important as how they are performing today. 

“While bigger isn’t always better, increased scale makes it easier for trustees to build an efficient and resilient business model that delivers strong financial outcomes for members. A fund that is losing members or has declining net assets will face challenges to keep fees and costs low for members, and fund operational improvements that ultimately benefit members.

“With the largest funds growing solidly, either organically or through mergers, the sustainability and performance gaps between the industry giants and the rest will only widen further without urgent action by small to medium funds.

“It’s for this reason that APRA will continue to encourage trustees facing performance or sustainability pressures to seek a strategic merger that can quickly deliver improved outcomes to their members,” Ms Cole said.

Copies of the publication/s are available on APRA’s website at: MySuper Heatmap papers.


1 APRA measures sustainability of member outcomes based on: Total Accounts Growth Rate (3-year average); Net Cash Flow Ratio (3-year average); and Net Rollover Ratio (3-year average). 

2 The heatmaps, published last December, cover 78 registrable superannuation entities (RSEs) out of the overall population of 140 RSEs with more than four members.

Media enquiries

Contact APRA Media Unit, on +61 2 9210 3636

All other enquiries

For more information contact APRA on 1300 558 849.

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.