C2. Are active Corporate fee discounts Regulator data The presence of fee discounts indicates a competitive market members and (output) between the banks as suppliers of superannuation services, and member employers as suppliers of significant numbers of intermediaries members/assets which will generate profit to the bank. AIST has able to exert no objection to this practice so long as the discounts benefit material members and there is no subsequent churn of MySuper competitive members into higher cost choice products. pressure? C3. Is the market Market concentration at Regulator data Agree with this indicator, although we think it is likely to be of structure wholesale and retail levels limited use in the super funds sector of the system. conducive to (HerfindahlHirschman Index The collective market share of the largest firms in the industry is rivalry? and market shares of largest likely to increase in the short term through industry providers)* (output) consolidation. In the long term it is desirable that there is a diversity of providers. The HHI will be more relevant in measuring concentration in custody and administration services where the systemic risk is likely to be concentrated though it is unlikely that data will be available in respect of them. C3. Is the market Number of institutional funds Regulator data Agree with this indicator. In the short term there is the potential structure (input) for industry consolidation. In the longer term it is desirable that conducive to there is a diversity of providers. rivalry?
C2. Are active members and member intermediaries able to exert material competitive pressure? Corporate fee discounts (output) Regulator data The presence of fee discounts indicates a competitive market between the banks as suppliers of superannuation services, and employers as suppliers of significant numbers of members/assets which will generate profit to the bank. AIST has no objection to this practice so long as the discounts benefit members and there is no subsequent churn of MySuper members into higher cost choice products. C3. Is the market structure conducive to rivalry? Market concentration at wholesale and retail levels (HerfindahlHirschman Index and market shares of largest providers)* (output) Regulator data Agree with this indicator, although we think it is likely to be of limited use in the super funds sector of the system. The collective market share of the largest firms in the industry is likely to increase in the short term through industry consolidation. In the long term it is desirable that there is a diversity of providers. The HHI will be more relevant in measuring concentration in custody and administration services where the systemic risk is likely to be concentrated though it is unlikely that data will be available in respect of them. C3. Is the market structure conducive to rivalry? Number of institutional funds (input) Regulator data Agree with this indicator. In the short term there is the potential for industry consolidation. In the longer term it is desirable that there is a diversity of providers.
sub039-superannuation-assessment.docx