Super funds get ahead of proposed minimum service standards: KPMG

A new report from KPMG finds superannuation funds are getting ahead for the government's proposed minimum service standards set for 2028, including embedding better accountability for service outcomes in their processes following a debacle of administration failures.

According to the 2026 Super Insights report, which analysed 2025 financial year data from APRA, funds are already redesigning processes, strengthening governance and investing in front-office capability.

This comes off the back of Treasury and the financial services ministry floating new mandatory minimum service standards for all large APRA-regulated superannuation funds in early 2025, forced to take action on widespread administration and back-office practices.

One high profile example is Cbus paying a nearly $24 million fine for the lengthy delay of death benefit payments.

The government now wants all super funds to step up and force the timely and compassionate handling of death benefits, fair and efficient processing of insurance claims, and clear, respectful and accessible communications with members.

The government also expects them to have better documentation and audit trails, carry out mandatory processes replacing discretionary practices. The first tranche of the standards is set to go live in July 2028.

KPMG's report showed super funds are implementing clearer accountability for service outcomes, improved performance measurement and better oversight of third-party providers, like administration and group insurance partners.

To improve member experience, over the next two years, super funds said they will concentrate on shifting from incremental digital enhancements to strengthening the underlying member experience architecture and operational disciplines that support scalable, consistent service delivery.

KPMG said experience initiatives should be embedded as levers to influence measurable member flows like early-stage intervention, consolidation completion and advice engagement and claim quality.

"Regulators are sharpening their enforcement focus on member servicing and in response funds are investing heavily in digital capability to meet member expectations," KPMG superannuation advisory lead Lisa Butler-Beatty said.

"Funds will need to deepen retirement engagement, improve guidance and communication, and continue evolving product and servicing models to support members' transition from accumulation to income, while meeting higher expectations for transparency, support and value."

In the 12 months to FY25, the average operating cost per member went from $237 to $250 across all funds, excluding SMFS.

Average operating cost on an asset basis declined from 0.23% to 0.22% thanks to strong growth in assets under management (AUM).

Super funds with AUM over $50 billion reported average cost per member of $232, up from $217 year on year. Those between $10 billion and $50 billion in AUM charged $389, up from $375.

KPMG noted "transformational activities and administration transitions are occurring in the industry" and as such have contributed to increased operating costs on a per member basis in FY25.

Members in Fiducian's Portfolio Services pay the highest amount of more than $2200, while FES Super members fork out $1727. BT, Netwealth and Macquarie superannuation members pay nearly $1000.

For MySuper fund members, administration fees charged on a $50,000 balance remained stable at 0.26%.

Industry funds continue to charge the lowest amount for default products at 0.23% while retail funds charge more at 0.35%.