AustralianSuper members are switching to rival superannuation funds faster than ever before, leaving the country’s largest retirement savings manager some $250 million worse off over the last year.
While that figure is small compared to the $400 billion the fund has under management, it is the first time there have been net outflows from members chosing to move to other wealth managers since 2004, which is when the prudential regulator first collected this sort of data.
The net outflows come amid a broader realignment in the retirement management industry, with more money flowing to adviser-focused wealth platforms like those run by HUB24, Netwealth and Macquarie.
“Not to put the boot into AustralianSuper, but there are now a number of stronger, more competitive brand names in the profit-to-member space and in the master trust space,” said David Bell, the executive director of Conexus Institute, a think tank that focuses on the superannuation industry and collates the annual figures provided to the Australian Prudential Regulation Authority.
While AustralianSuper had net inflows from other funds of $15.3 billion in 2022, this declined to $9 billion in 2023 and $5.1 billion in 2024. But the APRA data showed nearly $251 million exited to rivals in the last financial year alone.
These figures do not represent total flows. They only record when a member actively chooses to move money into the fund, or switch to a rival provider.
AustralianSuper is not the only major industry fund to face restless members. The Conexus Institute analysis shows more switching between managers than at any time since 2022, at the height of the pandemic. Around $78 billion in funds under management rolled in and out from funds, with more than half of these switches involving a financial adviser.
Conexus Institute’s report, to be published on Wednesday, noted AustralianSuper’s competitive performance had “deteriorated significantly”. According to annual disclosures, AustralianSuper cut its marketing costs by 15.6 per cent to $29.7 million in the year to last June. Over the same period Australian Retirement Trust and Hostplus all spent well over $30 million on marketing deals, while Aware Super led the pack with a $48.6 million bill.
Bell said: “Through some lenses, AustralianSuper’s investment performance has also been a little bit weaker than some of its peers, and then there is the negative media associated with some of their operational challenges.”
AustralianSuper says it is better placed than rivals
AustralianSuper’s investment returns over the past 10 years were about 8 per cent in its most popular balanced portfolio, ranking it fourth behind UniSuper, Hostplus and Australian Retirement Trust, but well ahead of the industry median of 7.2 per cent.
But the fund has fallen down the league table more recently – in the last financial year, it ranked 33rd out of nearly 40 funds with an annual return of 9.5 per cent, behind both the S&P/ASX 200 – which rose 9.97 per cent over that time – and the S&P 500, which had gained 15.4 per cent.
At the same time, the country’s largest fund has faced pressure from the Australian Securities and Investments Commission for overcharging fees by failing to merge duplicate member accounts, for delaying death benefit payments to families of bereaved members, and was hit by a cyberattack.
An AustralianSuper spokesman said the market was competitive and that it was investing in financial advice services, after repeated reviews found that most Australians are unprepared for retirement and, in some cases, turning to riskier investments as they near retirement.
The spokesman said AustralianSuper was “better placed than many of our closest competitors with respect to net cash flows”.
“We know the market is competitive. And we are making significant investments in advice … to deliver personalised guidance to more members than ever,” he said.
The industry has, however, largely been left waiting for over two years for a set of reforms that are set to make it easier for them to reach out and advise members approaching retirement.
The broader movement from big funds to adviser platforms was highlighted at the Financial Review Super Summit last year by UniSuper chief investment officer John Pearce, who described it as The Empire Strikes Back.
“We had the 1990s and early 2000s [when] it was retail that was winning the battle and then [after that] the industry funds were winning the battle. Now, you look at net flows, and it shows the empire is striking back,” he said.
While lax oversight of these platforms by trustees and administrators had led to issues over the past 12 months – most significantly with the $1 billion collapse of the Shield and First Guardian Master Fund – Chant West general manager Ian Fryer said the trend was unlikely to slow down, given platforms gave consumers a greater sense of control of their investments and advisers provided more guidance than what was typically available at bigger funds.
“There is a lack, we believe, in the guidance and advice that funds give at the point of retirement,” Fryer said. “We have a lot of people getting to the point of retirement and not getting the advice they need from their super fund, and so they feel a need to go elsewhere or find an external financial adviser.”
Source: https://www.afr.com/companies/financial-services/australiansuper-begins-to-leak-members-to-its-retirement-fund-rivals-20260203-p5nz52