The Evolving Landscape of Australian Superannuation: Key Trends Shaping the Industry

That scale, combined with significant regulatory reform and a rapidly shifting demographic profile, is influencing the way superannuation funds operate, invest, and engage with the broader market.

This article examines seven key trends in the Australian superannuation industry:

1. Asset growth continues at pace, underpinned by rising contributions and the increase of the superannuation guarantee rate to 12%.

2. The industry is consolidating rapidly, with a shrinking number of funds and "mega funds" now commanding the vast majority of market share, which are driving efficiencies of scale.

3. Regulatory expectations are intensifying, with heightened scrutiny of governance, expenditure, investment decision-making, and retirement income strategies under the Retirement Income Covenant framework.

4. Perhaps most notably for participants in Australian public markets, the growing willingness of superannuation funds to leverage their substantial shareholdings in ASX-listed companies to actively influence, and in some cases block, corporate transactions.

5. Funds using their influence to shift corporate governance at ASX-listed companies.

6. The demographic shift from accumulation to decumulation is accelerating, as millions of Australians approach retirement and funds grapple with the challenge of designing robust retirement income products.

7. The convergence of impact investing and environmental, social, and governance considerations is reshaping investment strategies.

Taken together, these trends signal a period of profound transformation for the superannuation industry and for the Australian capital markets more broadly. The implications extend well beyond fund trustees and members, touching on corporate governance, mergers and acquisitions strategy, regulatory policy, and the long-term structure of institutional investment in Australia.

Rapid Asset Growth and Rising Contributions

Australia's asset growth trajectory is particularly striking when compared to Canada — a jurisdiction often cited as a peer given its similarly concentrated, institutional pension model. Canada's pension system held approximately USD$3.4 trillion (approximately AUD$5 trillion) in assets as at the end of 2024, though this is spread across a mix of defined benefit and defined contribution arrangements. By contrast, Australia's system is overwhelmingly defined contribution. Australia's compulsory contribution framework — now at a 12% superannuation guarantee rate — continues to drive structural inflows that Canada's voluntary contribution settings cannot replicate at the same pace. Industry projections suggest that Australia's superannuation pool will overtake the United Kingdom's total pension assets within the next decade to become the second largest globally, behind only the United States.

Fund Consolidation and the Rise of Mega Funds

Alongside rapid asset growth, the industry has undergone significant consolidation in recent years, with recent examples including the merger of Telstra Super with Aware Super, and the merger of CareSuper with Spirit Super. Additionally, larger funds (such as Australian Retirement Trust) have continued to absorb smaller funds, including most recently, Qantas Super. In 2023, the Australian Office of Financial Management revealed that the number of individual funds with more than $50 million in assets under management had halved over the last decade, while the average fund size has increased more than fourfold. Jumping forward to 2026, nine "mega funds" each hold more than $100 billion in assets (up from eight "mega funds" in 2025), and together, the 24 largest funds account for over 95% of market share.

Heightened Regulatory Scrutiny and Governance Requirements

Regulatory pressures are intensifying across several fronts, including the best financial interests duty (BFID) as it relates to registrable superannuation entity (RSE) licensees' expenditure decisions, investment governance, member servicing, and trustee board accountability. On 30 June 2026, APRA published the results of its inaugural System Risk Stress Test (SRST), which tested how a severe shock could affect the Australian financial system, with a specific focus on the linkages between superannuation funds and banks. Whilst the SRST confirmed overall system resilience, it identified key vulnerabilities, including funding concentration between banks and superannuation funds, potential destabilisation due to large-scale equity sales and withdrawals from private markets and funds' reluctance to sell illiquid assets. APRA has flagged that these vulnerabilities will inform amendments to bank liquidity rules and that super funds should continue developing their stress testing capabilities and crisis preparedness. In particular, the growing allocation by superannuation funds to private markets is shifting regulatory attention, with APRA and ASIC prioritising supervision of valuation practices and liquidity management, and the superannuation system's exposure to private credit more broadly. These developments, combined with the potential for future early access schemes (as seen during the COVID-19 pandemic), are prompting superannuation funds to internalise investment management and liquidity management functions.

Further, there exists a shrinking pool of service providers and a greater reliance on outsourced service providers, which increases the risk of systemic vulnerabilities due to over-reliance on a limited number of providers. This concentration heightens the risk of poor member outcomes and increased vulnerability to a single point of failure. There is little wonder then why APRA is maintaining a watching brief in respect to the industry's implementation of Prudential Standard CPS 230: Operational Risk Management, to determine how superannuation trustees have effectively embedded operational resilience within their organisations.

In parallel, APRA is undertaking a targeted review of trustees' governance and oversight of investments offered via platforms. In the wake of the Shield and First Guardian failures, superannuation trustee boards (particularly those of platform-style funds) are expected to take a more active and direct role in selecting and monitoring new investment options. This may have significant implications for platforms, potentially leading to a rationalisation of investment menus and a reduction in the number of available options. ASIC has also recently released ASIC Report 833 Safeguarding super: How well are platform trustees monitoring risks to retirement savings? (REP 833), which marks the latest piece in the regulator's expanding focus on the gatekeeper obligations of platform operators and superannuation trustees. ASIC notes that these concerns, together with the growth in platform member benefits and advice fees charged from superannuation platform accounts over the past 10 years, were the key motivating factors for ASIC's review and findings in REP 833 (which sets out ASIC's expectation of platform trustees in respect to how such trustees onboard and monitor such advisers). See article here.

Whilst ASIC has stated that private credit can complement the banking system by providing long-term investment capital and maintaining capital flows during periods of liquidity restraint, ASIC warns that Australia's defined contribution model means investment losses are borne by superannuation fund members. ASIC has flagged that if allocations to private markets increase, superannuation liquidity mismatches and valuation lag risks could intensify. In this regard, ASIC has called on superannuation trustees (as identified "gatekeepers") to lift their standards, including prudently selecting and monitoring investments in private markets, ensuring rigorous governance over critical investment information such as valuations, and benchmarking their practices against ASIC's ten principles for private credit "done well".

ASIC's posture in this regard has shifted from guidance to enforcement. Following the publication of REP 820 and REP 823, ASIC issued design and distribution obligation stop orders, commenced civil penalty proceedings against platform trustees in the Shield and First Guardian matters, and in June 2026 conducted a snap review of 52 private credit funds. As discussed in our recent article, ASIC's enforcement reach extends across the full private credit value chain, encompassing financial advisers, research houses, and superannuation trustees. The civil penalty proceedings in the Shield and First Guardian matters were brought against platform trustees rather than the fund managers themselves, signalling that ASIC views their gatekeeping function as carrying substantive responsibility.

Exerting influence on M&A transactions

One of the most significant emerging trends is the growing willingness of superannuation funds to use their substantial shareholdings in ASX-listed companies to block, influence, or reshape public M&A transactions.

Super funds dominate the share registers of many large, listed companies and have demonstrated a preparedness to flex that influence. They are increasingly pursuing an active role in the oversight of their investments. With superannuation funds holding a material proportion of ASX-listed stock – in 2025, it was reported that institutional retirement funds held about 25% of the ASX – active engagement by such shareholders has the capacity to materially influence the public M&A landscape.

One of the most prominent examples occurred in 2023, when Australia's largest superannuation fund increased its stake in an ASX-listed energy company from 12% to 17% and opposed a USD$10.6 billion acquisition bid. The fund opposed the bid as undervaluing the company and generated sufficient shareholder support to prevent the bidding consortium from reaching the 75% approval threshold required for the scheme. In another instance, a major fund's 11% holding was reported to have influenced the withdrawal of a consortium's attempt to take an ASX-listed financial services company private at a valuation of approximately $1 billion. Similarly, the same fund — as the largest shareholder in a major Australian steel manufacturer — supported the rejection of a $13.2 billion takeover offer, publicly stating it would only back a deal that valued the company 'materially higher' than the price proposed, illustrating the significant influence a single fund can exert in determining transaction outcomes.

Super funds are also using their positions not merely to block transactions, but to actively participate in acquiring consortia. Recent examples of this are UniSuper participating in the $32 billion Sydney Airport buyout in 2022 and Macquarie Asset Management's $11.7 billion acquisition of Qube announced in early 2026.

This shift marks a departure from the historically passive approach of institutional investors, who would typically follow the favourable recommendation of a target board. This trend is expected to intensify as consolidation within the superannuation sector concentrates capital and increases the number of funds capable of executing or influencing large-scale public transactions.

In light of this trend, bidders and target boards alike will need to carefully monitor share registers, engage early with substantial superannuation fund holders, and anticipate potential intervention when structuring transactions.

Better governance at listed companies

Beyond their growing role in M&A transactions, superannuation funds are increasingly leveraging their substantial shareholdings to influence corporate governance outcomes at ASX-listed companies. This trend reflects a broader shift toward active ownership, with funds demonstrating a willingness to hold boards and executives accountable on issues of leadership conduct, related-party transactions, and organisational culture.

Recent high-profile examples illustrate the potency of this influence. At Mineral Resources, superannuation fund shareholders were among the institutional investors who pressed for accountability after revelations concerning undisclosed related-party transactions involving the company's managing director, contributing to his departure. Similarly, at a global technology company, sustained pressure from major institutional shareholders — including several of Australia's largest superannuation funds — contributed to governance reforms and leadership changes following public concerns regarding the conduct of the company's former CEO.

These examples signal that superannuation funds are no longer content to rely solely on board recommendations or to limit their engagement to voting at general meetings. As their holdings grow and consolidation concentrates capital among fewer, larger funds, their capacity to drive governance change — through direct engagement, public statements, or voting action — will continue to increase. For ASX-listed boards, this underscores the importance of maintaining robust governance frameworks, proactive shareholder engagement, and transparent disclosure practices.

Shift from Accumulation to Retirement (Decumulation)

Over the next decade, approximately 2.5 million Australians are expected to retire, requiring funds to develop robust retirement income strategies and tailored decumulation products. The shift from accumulation to decumulation has become a major focus since the Retirement Income Covenant, prompting funds to provide enhanced financial guidance, advice, and risk management solutions for retirees. An ageing population is also driving a gradual shift towards more defensive asset allocations, including increased fixed income holdings, whilst funds with younger member bases maintain higher growth allocations. Australian super funds are pivoting from balance‑maximising accumulation settings to retirement‑phase strategies that prioritise sustainable income, explicit risk management, and operational readiness. 

The 2022 Retirement Income Covenant requires funds to formulate and implement strategies to help members balance key retirement income objectives, further raising the governance bar. The introduction of the Retirement Reporting Framework in 2027 will further require transparency of offerings across the retirement landscape and encourage improvement in member outcomes.

Impact investing, investment trends, and ESG

The growing prominence of responsible investing – including impact investing and environmental, social, and governance (ESG) considerations – has emerged as a key feature of the modern superannuation landscape. Trustees and fund managers are increasingly recognising that fiduciary duty extends beyond the maximisation of short-term financial returns to encompass the prudent management of systemic risks – including climate risk, social inequality, and governance failures – that may erode long-term member outcomes.

Impact investing refers to investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return. It is distinct from ESG integration (which incorporates environmental, social, and governance factors primarily to manage risk-adjusted returns), negative screening and thematic investing.

Within Australia’s superannuation sector, major funds are increasingly dedicating capital to impact investments. For example, Australian Ethical, which has long positioned its entire investment philosophy around ethical and impact investing principles, recently launched its Growth Opportunities Fund – offering a diversified portfolio of private market investments designed to deliver market rate returns alongside measurable impact. Additionally, Australian Retirement Trust has committed more than $1.7 billion to investments that aim to deliver both strong long-term returns and positive, measurable social or environmental outcomes, with a stated goal of reaching at least $2 billion in impact investments by 2030; while REST has publicly targeted a 1% allocation of its total funds under management to impact-generating investments by 30 June 2026. More broadly, Australia’s impact investing market is experiencing significant growth. The 2025 Benchmarking Impact Report, produced by Impact Investing Australia and the UNSW Centre for Social Impact, found that, as of June 2025, $157 billion had been invested across 197 publicly available impact investment products – an eightfold increase in value since 2020.

Regulatory developments, including the introduction of mandatory climate-related financial disclosures under the Corporations Act commencing on 1 July 2026 for RSEs with greater than A$5 billion of assets or funds under management, have further accelerated the broader integration of ESG factors into investment decision-making processes. These disclosures cover governance, risk strategy, risk management and metrics and targets (including any executive remuneration targets linked to climate targets). RSEs in scope should expect to report portfolio‑attributed (“financed”) emissions as part of their Scope 3 emissions disclosures, from their second year of reporting in accordance with the Australian Sustainability Reporting Standards. A key challenge for superannuation portfolios will be data gathering and data integrity from listed and unlisted assets, infrastructure and other investments in their portfolios to comply with the Greenhouse Gas Protocol requirements.

In addition, the Australian Sustainable Finance Taxonomy, released by the Australian Sustainable Finance Institute on 17 June 2025 provides a science-based, voluntary classification system intended to strengthen investor confidence in low-emissions investment claims, reduce greenwashing risk, and improve the comparability of sustainability disclosures. The Government's forthcoming sustainable investment product labelling regime (expected to commence in 2027) will further shape the regulatory architecture within which these investment practices operate. As we discussed in our recent article, which you can read here, product issuers (including funds) using sustainability-related terminology should be taking practical steps now to prepare their product offerings and disclosure practices for the regime's anticipated requirements.

The sector's trajectory suggests that responsible investment strategies are increasingly becoming a feature of industry practice. Impact investing, while still maturing as a discipline, is gaining meaningful traction among Australia's largest funds as a differentiated allocation strategy. However, trustees and their advisers should remain attentive to the risk of "impact washing" and varied measurement frameworks – challenges acknowledged across the sector – as regulatory and reporting infrastructure continue to develop.