One of the big challenges for industry funds is a lot of them haven’t had to have sustainable value propositions before, because the money just rolls in. “If the money’s not rolling in the way that it did and the growth is not there, then you’re going to have to have some kind of special value proposition for your membership and that’s going to be a new skill for a lot of these funds.” There are the exceptions; AUSCOAL, for example, is targeted to the particular needs of coal miners, while religious funds such as Catholic Super & Retirement Fund and Christian Super target specific clusters of the community.

However Baker says the old catchcry ‘We know our members best because we’re the fund in that sector’ is not going to hold up in the new market environment. Key to providing better targeted services for members is the ability of funds to really understand their members’ needs. Baker says industry funds must segment their membership bases, similar to the way the financial planning profession segments its client base.

Doing this would give funds the opportunity to determine what type of members they’re trying to attract, and tailor their services accordingly. “Up until now it’s been growth, growth, growth; we want as many members as possible,” Baker says. “In a consolidating world I’m not sure you want growth for growth’s sake any more. Funds will become more discriminating about the kinds of members that they want. That’s good in some ways; they’ll start to target services and products towards those members, so you’ll see better products and services, but they’ll probably become more conscious of people who are there, for example, just for the insurance.”

As funds begin to consider new ways to differentiate their offerings, the focus has shifted from accumulation to retirement. Baker says funds are starting to think about how to retain members post-retirement, what type of products should be developed to meet their specific needs and whether the default retirement product is the same as the default accumulation product. “That’s a pretty interesting discussion, and it’s probably not [the same product],” he says. “[Funds] have done a tremendous job of building a mass market accumulation product but in a relative sense they’re really nowhere in retirement.

So they tend to lose a lot of their members before retirement; their retirement products are pretty early in their development, member advice models are pretty early in their development, so many of the funds would recognise that they’ve got a lot of work to do there.” The $12 billion Sunsuper is one fund that’s recognised the need to implement management processes to help members stay on through retirement. In May, the fund rolled out a newlook Retirement pension dubbed the Today and Tomorrow strategy, which provides an up-front two year supply of cash while investing the remaining balance in high income-yielding shares and stable assets such as property and infrastructure.