Australia’s $46b Sunsuper seeks to sprint ahead in pension fund race

A woman and a man look out towards the beach while sitting on a bench in Sydney, Australia, on Wednesday, April 1, 2015. Photographer: Bloomberg/Bloomberg

Sunsuper Pty Ltd., one of Australia’s 10 largest pension funds, is in a race to attract new customers and keep up with its competitors as the world’s fourth-biggest pool of retirement savings explodes in size.

The A$66 billion ($46 billion) fund is boosting its marketing to financial planners to ensure it gets a share of the money flowing into the industry. That will be a key focus of whoever takes over from Scott Hartley, who announced last week he is stepping down as chief executive officer once a replacement is found, Chairman Andrew Fraser said in an interview.

“The future of the Australian superannuation landscape is going to be defined by stronger retail competitive forces,” Fraser said. “Leaders who have experience in competing in those types of markets is something that I think is important.”

The superannuation industry, which invests the mandatory retirement savings of Australians, stands at A$2.8 trillion and is forecast to hit A$5.4 trillion within a decade. Funds are under increased pressure to cut fees and boost returns, which is leading to consolidation.

Since becoming CEO in late 2013, Hartley has almost tripled the size of Sunsuper, in part through mergers with Kinetic Super and AustSafe Super. The Brisbane-based pension fund was the nation’s second-best performer in the year ended March 31, returning 8.1%, according to superannuation researcher Lonsec Group.

It’s becoming ever more important to grow in size to keep up with the biggest players, according to Fraser.

AustralianSuper Pty., the nation’s biggest pension fund with more than A$155 billion under management, is on track to double in size over the next five years. That exponential growth is being helped by people shifting their retirement savings from bank-owned funds, whose reputation was sullied by a yearlong inquiry into financial industry misconduct.

“The nature of superannuation is overwhelmingly a scale game,” said Fraser. The ability “to compete and to win customers and indeed to retain members, to build that scale, is going to be a feature that will continue.”

Bloomberg