Super Funds May Be Forced To Consolidate In 2010

Post by NeilMc on January 5, 2010 · Under Australian Economy, Business News, Super Funds, Wealth Management, investments · Comment 

The superannuation (Super) fund industry is set to face increasing pressure to consolidate in 2010 as a direct result of the impact that was felt by the financial crisis that hit the industry hard during the last half of 2008 and much of 2009.

According to a report in The Age, smaller retail funds may have to take refuge in larger umbrella funds such as Master Trusts, whilst small to mid -sized industry funds may end up merging with one another.

The Age quoted Jeff Bresnahan, Managing Director of independent advisory firm SuperRatings as saying that the new membership rate was declining as workers have elected to continue paying contributions to their existing funds when switching jobs.

“That is going to put more pressure on funds that have not been run as a business,” Mr. Bresnahan said.

Mr. Bresnahan said that the decline in Assets Under Management (AUM) would mean that investment funds face higher costs, and that the increase in costs would force consolidation upon the funds which experienced a decline in AUM.

Last month, according to SuperRatings, superannuation growth funds were well on their way to posting double digit returns of as much as 12 per cent for the calendar year of 2009, largely due to the recovery in global equity prices.

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