Australia’s largest superannuation fund is maintaining positive cash flow, bringing in around $320 million each week. However, wealthier members are quietly moving their balances elsewhere due to inadequate retirement planning support. This is creating a costly outflow that even large inflows cannot completely offset.
Many profit-for-member superannuation funds such as AustralianSuper continue to benefit from compulsory employer contributions under union agreements. This ensures a steady flow of new funds. However, some funds are not keeping up with retirement services, particularly in areas like financial advice, tailored investment solutions and income products that attract older members preparing to withdraw their savings.
While overall net cash flow remains strong, the $5.1 billion gained last year from competitive flows, which refers to funds moved from other providers, is only one third of the amount seen three years earlier. Financial advisers, who often guide where retirees allocate their super, have increasingly recommended platforms such as AMP and Netwealth. These are better equipped to provide comprehensive retirement planning. Although AustralianSuper’s long-term returns remain strong, averaging 7.9% over the past decade and 9.3% since inception, that alone is not enough to retain all members.
This trend is especially evident among older, wealthier members with average balances of $190,000, which is close to double the fund-wide average. With more than one million AustralianSuper members aged over 50, pressure is increasing to deliver more flexible retirement offerings. One emerging option, which combines annuities with account-based pensions, is gaining popularity in other markets and appears to encourage retirees to spend more confidently. This also helps address government concerns about under-spending in retirement.
The federal government is expected to introduce new legislation within weeks to outline how super funds may work with financial advisers, potentially paving the way for better integrated services. In the meantime, even leading funds like AustralianSuper are struggling to keep pace, with its first annuity-linked product not scheduled to launch until next year.
