The Australian Retirement Trust, a fund that was created this year through the merger of QSuper and SunSuper, currently has about $230 billion in assets and is regarded as Australia’s second biggest fund, but KPMG said the consolidation of the sector was creating mega funds and ART and AustralianSuper would dominate the sector.

ART has previously forecast it would double in size over the next decade and the KPMG report said the market was already concentrated with 13 funds holding 75 per cent of the total net assets (excluding SMSFs) and 78 per cent of members.

But while the report found that the mega funds were continuing to dominate the sector, it also said significant change was needed as a significant number of members head towards retirement and would need new products from their fund.

It found members now expected to be able to access information and help as they want it, and ideally this had to be personalised.

“But the level of digital maturity varies significantly between funds – almost half do not currently use member data to deliver personalised experiences. They will need to better understand their members to meet their trustee obligations and especially to deliver advice efficiently,” the report said.

The big change for the funds would be the increasing number of people heading into retirement. The report said total pension payments were expected to grow to about $137 billion in 2040, compared with the $46 billion in 2021.

While the addition of new workers would mean the sector would not hit a position where more funds were being paid out than coming in there would need to be the development of broader base retirement offerings.

KPMG’s Linda Elkins said while the report showed that results for the super industry this year were quite strong, “it’s now time for funds to shift the conversation from accumulation to retirement”

She said the Federal Government’s legislation The Your Future, Your Super legislation and its annual performance test would continue to put pressure on a segment of the sector and result in further consolidation.

But the remaining funds needed to look forward to meeting their current and future member needs.

She said to stay big funds would have to attract and retain members.

“With around 20 per cent of total member benefits now in the retirement phase, the requirements of the Retirement Incomes Covenant formalise the need for funds to develop strategies and products for members approaching and in retirement.

“These need to be delivered in the context of increased regulatory scrutiny and the overarching requirement to act in members’ best financial interests. To succeed, funds will need to increase their access to data for identification and analysis purposes.”

The report found that the total value of funds rose in the 12 months to 30 June 2021 from $2.4 trillion to $2.8 trillion, while continued merger activity cut the number of APRA-regulated funds from 154 to 144.

The average account balance across all funds (excluding SMSFs) was $93,165, ranging from an average of $75,397 in the industry fund sector to $226,714 across corporate funds.