Superannuation ‘mega-funds’ raise questions on governance and influence

As we enter the era of superannuation mega-funds, important questions are being raised over the almighty power these funds could wield.

A new report suggests that 90% of the roughly 190 superannuation funds monitored by APRA  should consolidate into 10 to 15 mega-funds comprised of 1 to 2 million members and with balances exceeding $200 billion.

Economist Warren Hogan expresses concern that consolidation could result in less competition and a questionable concentration of power and influence.

“You do want competition, you do want choice and the more consolidated the industry the less [choice] there is,”

“Most industries tend to see the weak gobbled up by the strong over time and I think that’s what we’re about to see in the superannuation industry,”

About 1.6 million people have withdrawn up to $10,000 from their super fund early under the government’s emergency access scheme and Professor Hogan suggests this rush of people ripping out cash from their retirement savings highlights the problem some people have by being forced to participate in the government-mandated savings scheme.

“I think this is people saying they’re not all that comfortable with compulsory super and to have it in hands of private-sector megafunds I think raises some real questions of governance and the influence they would exert… particularly in unlisted areas like infrastructure,”

Click play to hear more from economist Professor Warren Hogan: