“Deliver[ing] the benefits of scale…the industry has not been as successful as it should have been, and we really need to redouble our efforts,” Mr Silk told the annual Stockbrokers Association of Australia conference in Sydney on Friday.
According to research firm Rice Warner, the superannuation industry is set to grow to $3.3 trillion by 2026. Mr Silk believes this ‘bigger pie’ must be translated into member benefits.
“We need to make sure that the marginal cost of administering the system is close to the marginal costs imposed on members and [that] members don’t pay a multiple of that cost,” he said.
“It is absolutely unacceptable. We need to look at every arm of our respective businesses to make sure scale, the benefits ascribed to scale, go through to members not agents of the system.”
At the moment, most of Australia superannuation funds are administered externally. However, AustralianSuper plans to administer more of its assets in-house. One of the reasons is because they do not want the fee structures of external managers to get the benefits of growth, Mr Silk said.
“Our plan is within five years’ time [to] have about a third of the fund’s assets internally managed,” Mr Silk stated, adding, “There is no point, from a member’s point of view, in us receiving contributions, handing them to investment managers and not capturing the scale of this ballooning growth.”
The industry fund does not believe it can better administer the funds, but does believe holding a portion in-house should reduce costs.
“We are not assuming that we will do a better job in generating gross performance than external managers; we are expecting to be as good as those. Assuming that to be the case, we will be reducing our costs sustainably,” he explained.
