Aussie super funds enter merger talks

By Grace Ormsby

March 04 2020
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Two Australian super funds have indicated they will be exploring an opportunity to join forces.

First State Super and WA Super have signed a memorandum of understanding (MoU) to explore the potential benefits for members of a merger.

A statement has revealed both funds will now work together to consider how “they can share and leverage each other’s services to deliver even better outcomes for members”.

First State Super is an industry fund providing superannuation, advice and retirement solutions to a number of Australia’s teachers, nurses, carers and community workers.

WA Super is the default fund for Western Australian local government employees.

The funds have noted that they will be undertaking an extensive due diligence process around any merger, but First State Super and WA Super have reported that they share many important components for a successful merger.

“They have common values and cultural alignment, a similar member base, a shared understanding of the value of financial advice and absolute commitment to putting members first,” it was said.

First State Super, and its associated financial planning business StatePlus, is already supporting nearly 8,000 members in Western Australia.

A merger with WA Super would see the combined entity looking after around 60,000 members in the state.

According to the super funds, the benefits of increased size and scale would see First State Super and WA Super members “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”.

Commenting on the signing of the MoU, First State Super’s CEO, Deanne Stewart, has commented on the fund’s belief that “size and scale matter” in ensuring that members are delivered “the best possible returns at the lowest cost”.

“These benefits include access to a more diverse pool of global investments and lower fees for members, not just investment fees, but also administration and trustee fees, which will ultimately deliver a better outcome to our members,” she outlined.

The CEO said a merger would also enable First State Super to enhance its service to both WA members and its broader member base, consistent with its national service model.

Reiterating Ms Stewart’s points around size and scale, WA Super’s CEO, Fabian Ross, said the fund had actively been seeking “a culturally aligned merger partner”.

“We recognise in the current superannuation environment that size can make a difference,” Mr Ross said.

He said WA Super had determined “that a merger with a like-minded super fund would add value not only to our members, but to Western Australians, too, as it would enhance the delivery of financial services and education across Western Australia”.

The CEO highlighted the use of WA Super’s “proactive stance” in considering how the fund could achieve benefits of size and scale through alignment with “the right merger partner”.

“Rather than sitting back and waiting to see what is going to happen, it is important that we work in our members’ best interests,” he commented.

The WA Super CEO highlighted that “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”.

In the MoU announcement, Ms Stewart also acknowledged that the past 12 months had seen “unprecedented consolidation in the Australian superannuation industry”.

Earlier this year, the domestic superannuation industry was tipped to see greater fund consolidation for reasons of scale.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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Retirement