APRA PUTS 116 SUPER FUNDS ON NOTICE

THE prudential regulator has taken aim at nearly 120 superannuation funds it says will struggle to stay competitive, with the retail sector set to bear the brunt of the pain.

Australian Prudential Regulation Authority’s chief super enforcer Margaret Cole warned Wednesday that the sheer number of super funds and investment options in the market was a detriment to members. She said time was running out for 116 of 156 regulated super funds as mega funds bolster their position and influence.

While 17 funds manage 70 per cent of assets in the APRA -regulated system, a “shocking” 116 funds manage less than $10bn each, with the bulk of those – 78 – operating in the retail sector, Ms Cole said.

“It’s here in particular where we can see the potential vulnerabilities the retail sector faces,” she told a Financial Services Council event.

“Size is not the sole determinant of performance. But it is absolutely a key factor influencing not only member outcomes, but also the sustainability of outcomes.”

Ms Cole said increased scale allowed trustees to spread fees and costs over a larger membership base while accessing higher earning investments in unlisted assets, such as infrastructure projects.