Scale and Competition in Australian Superannuation

24 Pages Posted: 6 Jan 2014

See all articles by Wilson N. Sy

Wilson N. Sy

Investment Analytics Research

Date Written: November 2, 2012

Abstract

Using official data and new econometric models based on how the industry actually works, we show the benefits of scale for members are limited, and confined to the non-profit sector which is structured to incur relatively low fixed costs compared with much higher variable costs. In Australian institutional superannuation, most efficiency gains, such as those from economies of scale, are captured as profits for financial intermediaries, with little benefit for members. Recent regulatory reforms on fee disclosure and scale requirements have the unintended consequences of further reducing competition and benefiting the large financial conglomerates.

Keywords: scale, competition, Australian, pension, superannuation

JEL Classification: D61, G23, G28, J32

Suggested Citation

Sy, Wilson N., Scale and Competition in Australian Superannuation (November 2, 2012). Available at SSRN: https://ssrn.com/abstract=2374930 or http://dx.doi.org/10.2139/ssrn.2374930

Wilson N. Sy (Contact Author)

Investment Analytics Research ( email )

12 Gilchrist Place
Balmain East, NSW 2041
Australia
0424669802 (Phone)

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