April 2026

The Australian superannuation landscape is undergoing a seismic shift toward extreme concentration. According to the Mercer Shaping Super 2026 report, ‘mega funds’ (those managing over $100 billion) are projected to control 54% of the market by 2035, up from approximately 39% today.

The Drivers of Consolidation

The primary catalyst for this shift is a relentless wave of mergers. The number of APRA-regulated funds is expected to plummet from 75 today to just 33 by 2035. This “survival of the largest” is fueled by:

• Regulatory Pressure: APRA’s performance tests and increased governance standards make it difficult for smaller, underperforming funds to remain viable.
• Operational Scale: As the system grows to a projected $8 trillion by 2035, funds need massive scale to invest in sophisticated internal capabilities, cybersecurity, and global private markets.
• Member Demographics: Mega funds are better equipped to build the “retirement income” products needed as the workforce ages and benefit payments begin to outpace contributions.

The Rise of the $1 Trillion Fund

The benchmark for what constitutes a ‘large’ fund is being completely redefined. AustralianSuper has already signaled its intent to hit $1 trillion in assets by 2035. This would make a single fund responsible for a significant portion of Australia’s total retirement savings.

Currently the numbers forecast for 2035 are as follows:

• Total System Assets: $8.0 trillion, up from $4.3 trillion
• Number of Funds: 33, down from 75
• ‘Mega fund’ Market Share: 54%, up from 39%
• Average Fund Size: $160 billion, up from $40 billion

Implications for the Industry

This concentration means the ‘middle class’ of superannuation, the mid-sized regional or industry-specific funds, is effectively disappearing. For the financial services sector, this means the power to influence markets, set fee structures, and dictate ESG standards will rest in the hands of roughly a dozen CEOs.

While this scale can lower fees and provide access to exclusive global assets (like US infrastructure), it also raises concerns about ‘systemic importance.’ If one of these $1 trillion entities faces a crisis, the impact on the Australian economy would be profound.

In summary, a forecast like this means that ‘mega funds’ will become the primary source of capital for domestic infrastructure and private equity, potentially crowding out smaller investors. In terms of corporate governance, a handful of fund executives will hold significant voting power over almost every major ASX-listed company, centralising corporate influence. With trillions to deploy, Australian funds will gain ‘soft power’ status, negotiating directly with foreign governments for stake in global assets. There is a risk that as the interconnectedness between super funds and banks grows, a liquidity crisis in one could immediately destabilise the other. We’ll certainly be watching this space and keeping an eye on the forecast rise of the ‘mega fund’.