Super’s dream run unsustainable

The superannuation industry is likely to reach $3.3 trillion by 2017, however, the current high growth rate will fall as baby boomers retire and Australia’s working population decreases, according to KPMG superannuation division partner Sean Hill.

“Unless the superannuation guarantee contribution rate increases to 15 per cent and present returns continue, the recent growth may peter out,” he said.

“The net change in population for people aged between 40 and 69 is expected to decrease significantly over the next decade, diminishing growth in retirement savings as the boomers push into drawdown. This will have a significant impact as wealth accumulation is at its highest when Australians are in their 40s.”

Hill estimated that by 2017, the number of superannuation funds with assets of more than $50 million will have fallen from 293 to about 100.

“Funds should be preparing long-term strategic plans and customer loyalty programs to achieve member retention and growth that will enable them to grow strongly into the future,” he said.

“In planning their strategies, funds should consider changing population growth and the specific demographic needs of the baby boomers, generation X and generation Y.”

Hill said super funds would also be well advised to develop clear value propositions that differentiate them from their competitors.

“Developing alliances between superannuation providers and other institutions can help funds to meet demands from members.

“Factors such as changing technology and the demand for real-time information delivered online through mediums such as podcasts will also impact the way in which funds communicate with their members.”