Your super fund is merging – what it means for you

We've seen a record amount of super fund consolidation over the last few years. As you'd be aware, there are different types of super funds; corporate, industry, public fund and retail funds. Putting aside the corporate funds (those offered to a company's employees - e.g., Telstra, Qantas, etc.), the remaining number of super funds available has shrunk from 161 to 106 in just three years*. That's a 34% reduction in the number of funds available for you to choose from.

This may sound counterintuitive; after all, who doesn't like choice? As consumers these days, we're forever searching and comparing to ensure we get exactly what we want. Well, The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, also known as the Hayne Royal Commission, prompted a swathe of recommendations following on from their findings, which included (among others)

• Middling investment performance
• High fees associated with managing the fund
• Dormant accounts (no contributions) being eroded by fees
• Multiple super accounts, as a result of default super employer arrangements
• Too many 'me too' style funds, which had no clear purpose for existence

As a result, the Australian Prudential Regulation Authority (APRA) encouraged mergers in a bid to provide better member outcomes, specifically:

• Improved investment performance
• Reduced fees through economies of scale and improved efficiency
• Improved sustainability and resilience, in being able to navigate complex financial environments

Yet, the consolidation is unlikely to stop there. In fact, Mercer's Shaping Super 2025 report** predicts that we'll likely end up with just 10-15 mega funds. These funds will be highly focused on scale and serving the general population. In addition to this, says Mercer's report, there are likely to be an additional 10-20 niche players with offerings specific to customer needs; for example, ethical funds, or funds focused on women.

So whether your fund is being acquired or doing the acquiring, chances are, a merger is coming for you — if it hasn't already.

So, what happens when your super fund merges?

Let's break it down from both perspectives — the Smaller Fund (the one being acquired) and the Bigger Fund (the one doing the acquiring).

1. You could see better investment returns

Smaller funds often don't have the scale to access specialist investment mandates or high-performing assets. Bigger funds tend to have broader exposure and a stronger track record. If your fund is being folded into a larger one, you could end up benefiting from improved performance over the long term.

2. Your fees might drop

One of the biggest drivers behind fund mergers is cost efficiency. When two funds combine, the administration fees generally come down. That's good news for members of both funds — economies of scale mean lower costs for all.

3. Member experience can be a mixed bag

Here's the catch: bigger isn't always better when it comes to customer service. The newly merged entity may have a larger member base to support, and not all funds are keeping pace with the tech upgrades needed to manage this growth. In some recent cyber attacks, delays and poor communication exposed serious gaps in service.

Can I opt out of a merger?

Yes. A merger doesn't lock you in.

You're not stuck with a fund just because yours was acquired. You can switch. You're a consumer of super, and that means you have choice. If you don't like the direction your fund is heading — whether it's performance, fees or service — you can and should shop around.

Use comparison tools. Read the PDS. Understand the long-term returns and what insurance policies are bundled with your account.

The bottom line

Consolidation in super is accelerating — and it's not slowing down anytime soon. While bigger funds can offer benefits, they're not always the best fit for everyone.

Keep an eye on your statements, stay informed about upcoming changes, and most importantly — remember it's your super. Your money for retirement. If your super isn't working for you - from a performance, fee or customer service perspective - move it.

Disclaimer: This information is general and does not take into account your individual objectives, financial situation or needs. Before making any financial decision, consider your own situation and seek independent expert advice.