The Federal Government is to merge the boards and administration systems of three of its superannuation schemes in an attempt to cut costs to members.
The Government announced last Friday that it planned to merge the boards of the Australian Reward Investment Alliance, the Military Super and Benefits Scheme, and the Defence Force Retirement and Death Benefits Scheme, by July 1, 2010.
A spokesperson for the Minister for Superannuation and Corporate Law, Senator Nick Sherry, said the merger of the three funds would create an entity with (today) around $22 billion in funds under management, providing an economy of scale previously only enjoyed by the $18 billion ARIA. She added that Sherry was “in favour of consolidation in the superannuation industry, so that more funds would be able to negotiate cheaper administration and funds management fees”.
The Government has given itself nearly two years to work out the details of how such a merger will work. Jeff Bresnahan, managing director at SuperRatings, said it would be interesting to see what synergies could be gained from “what appear to be three very diverse funds, with different management structures”.
He said: “It looks like it is going to be a big challenge to put these funds together."