Industry superannuation funds can’t stem the loss of members to self-managed superannuation funds with their current range of sub-par retirement income solutions, according to Russell Mason, superannuation partner at Deloitte.

According to Deloitte’s sixth biennial report, The Dynamics of the Australian Superannuation System 2013-2033, the SMSF market will reach $2.23 trillion by 2033, of which $800 billion will be in post-retirement assets.

Industry funds will represent $1.93 trillion while the total retail sector will hit $2.5 trillion in the next 20 years, however, the SMSF segment is the only market expected to grow in post-retirement assets given the low proportion of retail and not-for-profit super fund members who take an income stream over a lump sum.

“Those Australians with substantial super at retirement are overwhelmingly voting to put their money into their own self-managed superannuation funds, often on retirement, by transferring their benefit out of their corporate, industry or retail fund,” Mason said.

“Institutional funds have not yet been able to compete with the attraction of SMSFs and this will be the real battleground over the next decade.”

He acknowledged that the battle had already begun, with some of the larger funds introducing the ability for members to invest directly in term deposits and shares, as well as options targeting the income needs of retirees. However, Mason said, industry funds still had a lot of room for improvement.

“If you want to capture growth, there needs to be significant advancement in the solutions being offered to the non-SMSF market,” he said.

“SMSF growth is not a phase so industry and retail funds need to get more creative about the options they offer members. Direct-term deposits and the top-200 ASX-listed shares are just the beginning.”

Mason also called on the government to consider acting as the insurer against longevity risk by providing a guaranteed pension to retirees once they achieve a certain age, for example, 90.

This would allow people to plan for retirement better given technological and medical advancement were seeing people live longer.

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