AUSTRALIA - Australia's largest pension fund AustralianSuper has planned to merge with Westscheme to form a A$40bn ($40.2bn) fund with 1.7 million members.
Westscheme members will use AustralianSuper's size, security and expertise to maximise returns for its members, said AustralianSuper. Westscheme members and most of AustralianSuper's Western Australian members will form a newly created Westscheme division with over 300,000 members and A$5bn in funds under management, said the super fund. Westscheme currently has over 210,000 members and A$3.3bn in funds under management.
AustralianSuper's CEO Ian Silk said a strong state fund like Westscheme combined with a strong national fund such as AustralianSuper will give high performance and lower fees.
Westscheme CEO Howard Rosario said: "This merger is all about putting members first. Members will continue to receive locally based services and stand to gain significantly from low long-term costs, access to a wider range of benefits and products and strong long-term investment performance." The two funds are expected to merge on 30 June 2011.
According to RCM country head of Australia Michael Negline, a number of mergers and acquisitions are currently taking place within superannuation to help enhance long term returns.
Negline said: "It's all about consolidation. We are seeing a lot of big funds eating up smaller funds. Given the market for the past few years, there is a lot of pressure on super funds to perform. We are now moving towards a market where there are fewer super funds but which are a lot bigger and more sophisticated. A smaller fund's average cost of a member maybe a little high so they'll look to a larger fund and there will be some synergies to their ultimate goal or member types so it makes sense for them to be absorbed."
The acquisition comes after the merger of First State Super and Health Super which combined to create one A$28bn scheme with 750,000 members (Global Pensions: 18 November 2010) and Cbus Super and CONNECT Super which merged to create a A$15bn fund covering 600,000 members in the building and constructions industry (Global Pensions: 19 March 2010).
The Pensions Regulator (TPR) has set out plans to use "new regulatory initiatives" with over 1,000 schemes as it aims to tighten its regulatory grip and boost member outcomes.
HM Revenue and Customs (HMRC) has announced it is delaying the provision of data that will enable pension schemes to confirm the guaranteed minimum pension (GMP) benefits to pay to members until the end of the year.
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