Retail superannuation funds copped a battering of outflows as latest APRA figures paint a telling picture of a booming industry super fund sector nearly one year after the Hayne Royal Commission.
Retail fund assets were flat at $625.7 billion in the year to June 2019. Industry funds on the other hand grew by 13.8% year on year to $718.7 billion, inching closer to the size of the self-managed super fund sector of $747.6 billion.
Overall, the superannuation pool grew by 6.2% year on year to $2.9 trillion, APRA's quarterly statistics show.
Post the Hayne Royal Commission, the results highlight that funds have been flowing out of retail funds into public sector funds and industry funds, Rainmaker head of superannuation research Jason Ross said.
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Despite the fact that the June quarter was positive for financial markets given the ASX200 rose by 7.9%, Ross said retail funds only grew by 0.4% quarter on quarter.
"During the same period, retail funds also received contributions from members and employers of 1.6% and had investment earnings of 3.8%. This highlights the impact of the net outflows out of retail funds," he added.
Public sector funds were the biggest beneficiaries of net flows during the quarter, enjoying net benefit transfers of $19 billion.
"Industry funds in the meantime had net benefit transfers of $5.1 billion. This has come at the expense of retail funds which saw net benefit transfers of -$20.9 billion," Ross said.
At a recent Bloomberg event, top of mind for a panel of superannuation industry experts was the possibility of the retail fund sector regaining its market share.
Sunsuper outgoing chief executive Scott Hartley said major retail super funds are in the processes of restructuring and are currently "on the operating table" - but can somehow recover.
Retail super funds can still play an important role in the industry, but it comes down to how they can achieve better member outcomes, he said.
Also on the panel, Financial Services Council chief executive Sally Loane said while the retail sector has taken a hit, it will "come back in a competitive fashion".
The "unwind" began before the banking Royal Commission, she said, at a time when the big banks and institutions began offloading their wealth divisions.
Loane sees retail funds re-emerging in a more efficient way via engaging younger members and digital means.