One of Ian Silk’s favourite quotes about
the 2006 merger between STA and ARF is that “the planets were in alignment”. Perhaps
a minor astrological miracle is what it takes for a super fund merger to get up
these days, because nothing remotely comparable to the $20 billion get-together
that created AustralianSuper has happened since. (SERF and SRF formed Maritime Super
at $3.5 billion; Victoria’s Catholic Super plus National Catholic Super will
equal about $3.5 billion too; JUST and Print formed Media Super at $2 billion –
if I’ve missed a bigger one, send letters to the usual address.)

Still, there
are plenty of people predicting rapid consolidation. Rice Warner’s Alun Stevens
recently projected that between June 2008 and June 2013, the number of
corporate funds would drop from 225 to 60; industry funds from 75 to 40 and
public sector funds from 40 to 13. And there are already far less retail funds
than the 175 entities Stevens counted last June. Australian Wealth Management
has swallowed a few since then; turn to page 35 of this issue for the
Suncorp/Asteron story of turning 30 superannuation products into five.

Suncorp’s
Vicki Doyle attributes that consolidation to the waiver of capital loss
crystallisation in successor fund transfers, which the Government introduced
last year and extended until June 2011 in the Budget. But I don’t agree that
measure will lead to the rush of mergers across the super landscape that some
are predicting, at least among mid-to-large funds. Mergers of retail funds are
one thing – the trustees are usually employees of the organisation branding the
fund, and so view the board position as just one part of their day-today financial
services duties.

In not-for-profit land, the trustee responsibility can stand
apart from an individual’s other responsibilities, and is understandably more
cherished. But it can lead to tribal behaviour. How else to explain why despite
occasional rumours, there appears to be no talks between HESTA and Health Super?
(“The Hatfields and McCoys” comments one Melbournian.)

Why no plan for a big,
super-efficient Catholic fund? (ie one that includes Sydney’s CSRF, and can scale up its
self-administration site in Burwood.) Perhaps it’s about size difference. Silk
has said the similar FUM of ARF and STA was a factor in the merger’s success – “we
are talking about a ‘merger’ after all,” he has said. Several submissions to
the ‘Storm Financial’ parliamentary enquiry have suggested the Government
create its own, low-cost public offer super fund. The threat of that sort of
monolithic competition might finally make a few more mergers happen, creating
cost savings and service expansions for more members to enjoy.

 

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