Australia's superannuation sector, valued at $4.2 trillion, is currently grappling with rising costs and service gaps, leading to increased calls for fund mergers, as highlighted by KPMG.

Despite solid fund returns, the past year has been marred by significant challenges, including landmark court cases and multiple cyberattacks that have impacted several funds.

A report released by ASIC in March 2025 criticized the industry for its failure to manage death and disability benefit claims, notably pointing out AustralianSuper's inability to process nearly 7,000 claims.

In April 2025, a cyberattack on five super funds resulted in unauthorized access to thousands of accounts, causing losses of $500,000 for four customers of AustralianSuper.

The largest merger in the previous financial year occurred between CareSuper and Spirit Super, creating a combined fund that now serves over 590,000 members and has seen a remarkable growth rate of over 150% in assets and membership.

The trend of consolidation within the superannuation sector is evident, with not-for-profit industry funds increasing their market share from 38.2% to 40% in the 2023-24 period.

Linda Elkins from KPMG emphasized that funds need to strike a balance between managing costs and enhancing customer experiences while also addressing risks such as cyberattacks.

KPMG's report revealed that the average operating cost per member for super funds rose from $230 to $237 in the 2023-24 financial year, underscoring the necessity for improved customer service amid escalating expenses.

The rise of 'mega funds,' defined as those with assets exceeding $100 billion, has been partly driven by recent mergers, with Hostplus now joining this elite group with $115 billion in assets.

The superannuation landscape features eight mega funds, which include a combination of four industry funds, one public sector fund, and three retail funds, alongside six additional funds with assets ranging from $50 billion to $100 billion.

In November 2024, ASIC took legal action against Cbus Super for failing to process $20 million in death and disability insurance claims, highlighting ongoing issues within the sector.