Tony Lally, chief executive officer of the fund, says member retention into retirement will be a big growth area for industry funds in the next five to 10 years. “In the past, losing members wasn’t such a big problem because the balances weren’t very big and industry funds just focused on accumulating assets for members,” he says. “As the balances are getting bigger, it’s more important to retain members into retirement.” Since revisiting its member advice model and placing a stronger emphasis on retirement, Sunsuper has improved its member retention post-retirement.

“In the last 12 months we’ve retained approximately 50 per cent of the assets of members who reached retirement age,” Lally says. “In the year ended June [2009] we sold four times as much in allocated pensions as we did two years ago. By focusing on this and putting effort into it, we have dramatically increased the retention of assets and the sales of the allocated pension to members in retirement.” According to Lally, member segmentation, which the fund has been doing for the last two years, has allowed Sunsuper to tailor its messages to different members.

“In the past, before you had good segmentation tools, you’d be looking to do three or four campaigns a year; we can do one a week now,” he says. “One week we did two: just before and just after the Budget.” As industry fund models evolve and increase in sophistication, Baker says the super industry will turn into what he calls a “normal industry”, where a small number of large players compete on price and a larger number of smaller firms compete on value propositions based on more than just low cost.

“Industry funds have been able to differentiate very sharply on price; they’ve got the ‘Big W’ positioning: friendly, everyday low price,” he says. “That’s drifted a bit in the last few years – it’s nowhere near as sharp as it was. Award modernisation, increasing choice and competition for more valuable members are changing the status quo. The transformation to more of a marketing-led business is not an easy one.”