AUSTRALIA - the Australian Securities and Investment Commission (ASIC) has written to superannuation trustees to remind them of the disclosure requirements associated with undertaking mergers and consolidations.
In a letter dated 13 May, ASIC reiterated that in the event of a merger, "where members may be transferred between funds, our interest in in ensuring that members are adequately informed about the changes and what these changes may mean for them." Under Australia's regulatory model, ASIC is the disclosure regulator in relation to superannuation.
ASIC's letter is viewed as a pre-emptive activity, but given that there are mergers going on, it is timely, said Fiona Reynolds, CEO of the Australian Institute of Superannuation Trustees.
"Given that there is significant merger activity happening at the moment, this is a timely reminder to trustees of the importance of member interests being uppermost in their minds when mergers are being considered," she said. "In particular, members must be kept up to date and fully informed of what the changes may mean to them. That said we are confident this is a pre-emptive move by ASIC and that trustees would be fully aware of their obligations to disclose this information to their members."
In February, Australia's largest pension fund AustralianSuper announced plans to merge with Westscheme to form a A$40bn ($40.2bn) fund. (Global Pensions; 10, February 2011). That announcement came just four months after superannuation funds First State Super and Health Super confirmed their plans to merger to create a A$28bn scheme. (Global Pensions; 18, November 2010)
Trustees are required to inform members about the merger, as it is a significant event and to provide product disclosure statements (PDSs) to transferring members that explain the product the member will hold following the merger. Prospective members should also be catered for with PDSs provided for the current fund explaining the merger, ASIC said.
"It's important that funds continue to produce information in a clear, simple and concise format, because this is the only format in which it will be of any use to members," Reynolds said. "Mergers are complicated, and we know people already think super is a complex product - so it's important that funds communicate in straightforward, easy-to-understand ways and keep their members updated."
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