Australian superannuation funds First State Super and WA Super have announced they’ve begun discussions regarding the possibility of a merger.
Their announcement marks the continuation of a trend in the region where many superannuation funds have announced they’re looking to do the same thing. First State Super is already in the process of merging with VicSuper to form an A$120 billion ($84 billion) fund by June 30. Other funds which have announced their intentions to merge are Equip and Catholic Super, SunSuper and Qsuper, and the Rio Tinto Staff Superannuation Fund and Equip.
“Through the benefits of increased size and scale, First State Super and WA Super members will be supported to prepare for the kind of retirement they deserve, through strong, sustainable long-term investment returns, reduced fees over time, and access to innovative products and services to support their needs, now and into the future,” the funds said in their joint news release.
The country’s parliament has frequently endorsed the consolidation of retirement consortiums for the sake of simplicity. Underperforming funds have been the focal point of intense scrutiny by the region’s legislators, leading to new legislation that would call upon the board to consider the best interests of plan members.
“We recognize in the current superannuation environment that size can make a difference. With size comes scale, which can have a significant impact on our members’ fees, returns, and ultimately their long-term retirement savings,” WA Super CEO Fabian Ross said in a statement.
“Should this merger proceed, the outcome would be to provide our members with the knowledge and reassurance that their retirement savings will be in safe hands, and that First State Super will continue to help them achieve the retirement dream they want and deserve,” Ross said.
The due diligence process for the merger is expected to be completed by the middle of 2020. If completed, the merged fund would have approximately 60,000 members, with about 8,000 coming from First State Super.