AUSTRALIA - Australian energy superannuation funds ESI Super and SPEC Super have agreed to a merger deal that will create a new A$3.4bn (US$3.1bn) fund.
The merger will create one of Australia's largest funds covering employees in the energy sector. The deal should be completed by the end of the first quarter 2011.
ESI and SPEC chairman Bob Henricks said the merger will lead to savings of A$2m a year because of economies of scale. He also said member benefits would be enhanced, including access to more competitive insurance policies.
The new merged fund will adopt SPEC's administration model while ESI's team will oversee fund management and financial services.
Henricks said: "The decision to merge is not a decision we have made lightly, but follows an intensive review and planning process spanning many months."
He added: "As we go through the process of merging, we are committed to keeping our members and stakeholders informed and involved to ensure the best possible outcome."
Cost savings is often a driver behind super fund mergers. In March, the A$700m CONNECT Super said it reached a merger agreement with the A$14bn Cbus Super in part because the smaller fund would struggle to provide cost-effective services. (Global Pensions; March 19, 2010)
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