The growing importance of member retention 

Australia’s superannuation system is maturing. Competition is increasing, and members are becoming more aware of the range of superannuation options available to them.

Member retention is emerging as a defining strategic capability for superannuation funds as persistent outflows compound over time, eroding scale and long-term sustainability. While member retention is widely acknowledged as a priority, across the market it remains a challenge.

Analysis of industry data shows that the average superannuation fund loses around 7.5% of members each year. However, retention performance differs significantly between funds.

Mercer’s Shaping Super 2026 research highlights that a small group of funds outperform on retention, losing only half the members that the industry average implies while another group of 12 funds lose 50% more than the average. 

In researching member retention in H1 2026, Mercer Consulting interviewed superannuation trustees and executive teams responsible for member retention. Our analysis examines retention outcomes and operating approaches across a broad cross-section of the Australian superannuation system. The funds represented account for around 41% of member accounts and 34% of member assets, providing a robust view of how retention is playing out across the market.

While retention challenges vary by fund, our interviews with trustees and executive teams’ highlights a set of patterns emerging consistently across the system. These patterns are:

1. Concentration of exits around key life stages

Member’s primarily leave their fund at two points in their superannuation experience. In the:  

• Period following 'onboarding’, with exit data showing members are between 32% and 74% more likely to exit within five years of joining their fund relative to other members.
• Lead up to retirement (from age 55) with members 43% more likely to change fund than a decade earlier. While the reasons for this are multifaceted, this is likely the result of this being the point where members are financially engaged, seek advice, and reassess whether their fund can best support their retirement objectives.

2. Platforms are the greatest ‘threat’ to both industry fund and retail master trust fund member retention

Financial advisers use superannuation platforms to assist them manage their client needs. This means that as members approach retirement and seek advice to address their more complex financial decisions, these platforms become a natural destination of these (typically higher balance) members. Across our interviews all funds noted platforms as a major driver of outflows, with stronger-performing funds focusing on lifting member service and building confidence to help reduce the risk of switching.

3. Fund-specific ‘at risk’ cohorts

Beyond retirement-related transitions, many funds also identify a secondary retention pressure point shaped by their unique membership profiles. While these vary from fund to fund, they include members exiting employer-based funds following employee termination and low balance members being captured within the Protecting Your Super ATO sweep.

For much of the superannuation system’s history, funds operated within settings that provided a natural inertia to support scale and stability. Default arrangements, and relatively low levels of member engagement meant that loyalty could largely be assumed rather than earned.

As the superannuation system matures, the implication is clear: Funds must now be worth choosing, and worth staying with, across the member lifecycle. Retention is no longer a passive outcome of system design. It is an active test of relevance, service quality, and confidence in the fund's ability to support increasingly complex decisions. 

Strong retention performance is rarely the result of a single program or campaign. It is a culture that is developed over time, shaped by sustained investment, organisational culture, and operating model choices. Put simply, the funds that perform well on retention are in that position because they have invested in becoming a fund that members trust. From a practical perspective, cultural change requires that the individuals who are responsible for retention (or its drivers) have authority to affect change across the fund, including to drive a:

• Transition to a ‘Business-to-Consumer’ (B2C) style operating rhythm, in which the entire member outcome and customer value proposition is viewed from a service lens.
• Clear tiering of accountability for member service initiatives with routine governance (e.g. monthly steering, project pipeline and measurable ROI gates) allocated to those with control.

Beyond these cultural elements, funds that perform strongly on retention have often developed a triaged and iterative approach to data analytics. For instance, while most funds understand which members leave, better performing funds have triaged the ‘common’ reasons for exit into those that can be addressed and those which cannot. Exit propensity models are then only built for issues which can lead to a series of next best actions which are ‘triggered’ via the model.

Drawing on these findings, Mercer has developed a framework to assess a fund’s retention capability on a 5-point maturity scale. This scale considers the extent to which funds have been able to embed the required cultural member’s perspective whilst having the analytical capability to diagnose pointwise issues and implement resolutions. Most funds sit around the middle of this scale, with weaker performance on culture and sound (but not stellar) analytical capabilities with execution often constrained by budget, operational capacity, or risk appetite.

From this ‘middle’ position, the work required is substantial but so too is the potential upside. Comparative analysis of this maturity scale relative to fund retention rates suggests that a one-point improvement on the maturity scale is associated with around a 30% reduction in annual exits to other funds. For many funds, an improvement of this magnitude equates to billions of dollars of assets retained each year which compound over time.

Within this context, the key questions for trustees and executives become clear: where do we sit today, and what would it take to move up the maturity curve?

Retention, ultimately, is not about holding members back. It is about earning their continued confidence at the moments that matter most and actively giving them a reason not to leave.

Member retention is a key part of a broader transformation underway across Australia’s maturing superannuation system.

To explore the full set of forces shaping the future of super including scale, retirement outcomes, advice, and system maturity, read Mercer’s Shaping Super 2026 report or speak with our superannuation and retirement specialists.