Australia’s superannuation system will triple within 20 years and be dominated by a handful of mega-funds, while retail and SMSF segments are expected to lose relative share over time.
The 12th edition of the Dynamics of the Australian Superannuation System from Deloitte found that consolidation, technological change and an ageing population will intensify the challenge of turning larger balances into sustainable retirement income.
According to the report, total net superannuation assets in Australia are expected to increase from around $4 trillion in 2025 to $12.4 trillion by 2045, equivalent to approximately $7.5 trillion in today’s dollars.
Andrew Boal, Deloitte actuarial consulting partner, said Australia’s super system continues to grow strongly, but the real test is whether the system can translate that growth into sustainable retirement income and improved outcomes for members.
“As balances rise, there is an urgent need for more sophisticated, fit-for-purpose retirement products that can balance income, flexibility and longevity protection for a much larger and more diverse retiree population,” Boal said.
“Just as important will be how the funds engage with their members who are approaching or are in retirement, as it will not be easy for most members to navigate the complexity on their own to tailor their own portfolio of products and settings to meet their individual needs.”
The report shows the superannuation system has moved firmly into a mega-fund era, with consolidation continuing to reshape the market.
The report estimates the number of mega-funds with assets under management exceeding $100 billion will grow from 10 to 12 within a few years. Meanwhile, corporate funds have largely disappeared, while the not-for-profit sector now controls more than half the system. Retail funds (including platforms) and SMSFs each account for about a quarter.
Furthermore, the report found that industry funds are projected to strengthen their lead as the dominant segment as other fund types stagnate or decline.
Industry funds now account for around 46 per cent of total assets in 2025 and are projected to expand their share to 55 per cent by 2045.
This growth is being driven by strong default inflows, lower average fees and ongoing fund consolidation. By contrast, the retail and SMSF segments are expected to lose relative share over time.
“Retail funds are stabilising after a period of decline, but growth is increasingly concentrated in adviser-led platforms rather than traditional master trusts,” Boal said.
“SMSFs, while still significant, are projected to gradually decline as a proportion of the system, reflecting an ageing member base and increasing drawdowns.
The report also said SMSFs remain a preferred vehicle for many wealthier Australians, reflecting the combination of concessional tax treatment, flexibility of investment choice and a high degree of control.
“However, while these attributes remain attractive, we expect the SMSF sector’s share of total superannuation assets to gradually decline over the next two decades. This expectation reflects several structural factors,” it said.
“The existing SMSF population is skewed towards older cohorts, and as these members transition into retirement, SMSFs are expected to commence material drawdowns, reducing aggregate balances over time.
“At the same time, contribution caps and transfer balance limits have significantly constrained the ability to accumulate very large super balances on a tax-advantaged basis, limiting the emergence of new, very large SMSFs even among high-wealth individuals.”
It continued that this trend is expected to be reinforced by ongoing improvements in the scale, cost efficiency, investment capability and retirement offerings of large industry and retail funds (especially the platforms), which are increasingly narrowing the historical advantages of SMSFs for some members.
“While 85 per cent of SMSF members are aged 45 or older, there is an emerging trend for more SMSFs to be established by 35-44 year olds seeking greater choice and control,” it said.
“The SMSF sector, characterised by an older demographic profile, already holds a substantial proportion of assets supporting pension-phase accounts. However, post-retirement growth in SMSFs will be constrained by higher pension drawdowns and associated cash outflows.”
