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.