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NFP funds dominate retiree super: Research

The world of retiree super - traditionally the domain of retail funds - is now overwhelmingly controlled by the not-for-profit sector, new research shows.

About 60% of all retiree superannuation savings is now held in NFP funds, Rainmaker analysis of data for the period ending December 2021 shows. In 2015, NFP's share of the retiree market was just 34%. In the same period, retail super's share has dropped from 66% to 43%.

Six out of the 10 largest funds for retiree assets are also now NFPs, with the five largest funds by retiree assets being Colonial First State, AustralianSuper, Aware Super, Australian Retirement Trust and Commonwealth Superannuation Scheme. The other funds are AMP Super, BT, MLC Super, UniSuper and Commonwealth Super Corp's PSS.

Interestingly, of the top 10 retail funds by retiree assets (dollar amount), these assets make up close to half of their total funds under management, demonstrating retail funds' reliance on retirees.

This shift in preferences could prove a significant issue for the retail sector, the research suggests.

Previous analysis by Rainmaker shows that two thirds of all the super fees members will pay throughout their lifetime will be paid in retirement.

"This, combined with retirees' high balances, makes retirement super by far the most lucrative portion of the superannuation industry for wealth managers," Rainmaker said.

"Retail super's high dependency on retirees has a downside, however. It makes it very vulnerable to the sector's disruption. And this is even before we consider the impact of the transformative effects of the Retirement Income Covenant."

Read more: AMP SuperAustralian Retirement TrustAustralianSuperAware SuperBTColonial First StateCommonwealth Superannuation SchemeCommonwealth Super CorpMLC SuperRainmaker InformationRetirement Income CovenantUniSuper