Our super funds are good at making money but face a rising challenge
Superannuation funds will need to keep getting bigger through mergers, says KPMG, as the $4.2 trillion sector tackles rising costs, and a run of high-profile incidents revealed gaps in the services provided to members.
While Australia's super funds continue to grow, and latest fund returns have been solid, the past year has been a rocky one for the sector. Some notable funds were rocked by landmark court cases from the corporate watchdog and five came under major cyberattacks.
In November, the Australian Securities and Investments Commission launched court proceedings against Cbus Super for delays in failing to process death and disability insurance claims, which cost their members $20 million.
Then in March, ASIC released a damning report on industry-wide failures to process death and disability benefit claims after it sued AustralianSuper for failing to process close to 7000 death insurance claims earlier the same month.
The challenging year for the industry continued in April when thousands of Australians' accounts were accessed in a cyberattack on five super funds. Four customers of AustralianSuper lost a combined total of $500,000.
In a report published on Tuesday, KPMG says meeting the growing expectations of customer service from members would be a key focus for funds, while they also grappled with higher operating costs. The KPMG report, which analysed data from the Australian Prudential Regulation Authority, shows per-member operating costs across the industry increased from $230 to $237 in the 2023-24 financial year.
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Head of asset and wealth management at KPMG, Linda Elkins, said that with costs creeping up, super funds needed to manage their spending while continuing to improve customer experience and mitigating risks like cyberattacks.
Super funds have been consolidating through a series of mergers in recent years, and Elkins said one way for funds to deal with the extra costs was by joining forces.
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