Choice to reach $1.54t by 2026

Choice Australian Prudential Regulation Authority (APRA) superannuation funds will continue to have the largest market share in 10 years and is expected to stand at $1.54 trillion, according to Rice Warner.

According to Rice Warner’s latest analysis, the super industry would see a change in segmentation in the next decade.

MySuper will continue to be the default strategy for employers and their employees, and self-managed superannuation funds (SMSF) will continue but the rate of growth will slow and new members might be dominated by those who use financial advice on a regular basis.

By Rice Warner’s modelling, SMSFs would lose three per cent of its market share to 28 per cent by 2026.

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“There will also be choice products designed for individuals who want an alternative to MySuper. Personal super products have been offered by financial institutions for 40 years but we are now seeing a group of products based on marketing fads,” Rice Warner said.

“While they have slick marketing, they often provide poor value. This is an emerging threat to the status quo.”

The report also expected retirement products with a range of solutions to help members to drawdown their pensions smoothly.

“All funds will seek to provide liquidity for pension payments with different ways of dealing with longevity and inflation protection,” it said.

Rice Warner expected that the super industry would reach $4.61 trillion by 2026.

On fees, the research house anticipated fee levels to keep falling despite a likely continuing growth in member services.

“In 10 years our largest fund will have $250 billion. With enhanced technology, could it operate for 45bps [basis points]? That is, $1.125 billion. Could that fund get down to 30 bps which is still $750 million?” the report said.