The Australian super industry is evolving � a trend we’re calling ‘superannuation musical chairs�.
Strong investment returns saw industry assets grow to $3.9 trillion.
Regulatory scrutiny is also intensifying, and the industry is seeing changes across business models, products and governance arrangements, with the ultimate question: When the music stops, where will super funds and service providers land?
Super Insights 2025
Download ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s Super Insights report featuring our Australian superannuation industry analysis or register for access to the ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø Super Insights interactive dashboard.
Superannuation market overview
Continued growth of industry super funds
Over FY24, industry funds increased their market share by 1.8%, growing from 38.2% to 40%. This growth came at the expense of self-managed super funds (SMSFs), which saw their market share decrease by 2.1%, from 30% to 27.9%.
Mega super fund performance
In FY24, eight mega funds surpassed $100 billion in assets each. They include four industry funds (with new entrant Hostplus), one public sector fund, and three retail funds. Six funds now hold $50�100 billion of assets, with a recent merger adding to this tier. And eight funds hold $25�50 billion. Together, these 22 funds contribute to over 93% of market share.
Strategic priorities
In FY24, APRA emphasised balancing super fund expenditure with best financial interest duty. Funds are enhancing financial modelling tools to assess long-term net benefits of their expenditure decisions. Key trends include employer-focused new business, preparations for Payday Super, digital engagement, and investments in brand building. Understanding membership cohorts and retention strategies remains crucial.
Australian superannuation industry performance snapshot
Sustainability and BFID
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.
Markets, mergers and new models
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.
Retail market evolution
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.
Fund member demographics and expectations
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.
Regulation and retirement products
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.
Financial resilience
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.
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Download: Super Insights 2025
ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s Super Insights 2025 report provides analysis of the Australian superannuation market for FY24/25.
Download report (PDF 4.6MB)Previous editions and related articles
Super Insights 2025 dashboard
The ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø Super Insights dashboard offers a customisable, clear picture of fund performance at an industry, segment and fund level including key focus areas for the next 12 months.
Superannuation data and analytics services
ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø can provide tailored analyses of Super Insights 2025, including comparing the performance of your super fund against others, projecting future performance data and modelling the impacts of potential super fund mergers.
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FAQs
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What is a superannuation review? 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.
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Does ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s Super Insights include all the superannuation providers? ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’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.
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What is the current size of the Australian superannuation industry? 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.
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What are ‘mega funds� in the superannuation industry? We label mega funds as those with more than $100 billion in assets under management (AUM). As of FY24, there are eight mega funds.
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How has the market share of industry funds changed recently? 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).
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What industry changes are expected for Australian superannuation funds by 2025? 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.
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How will market volatility impact Australian super fund performance in 2025? 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.
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What are the emerging regulatory pressures affecting the superannuation industry? 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.
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How should super funds address shifting member demographics towards retirement? 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.