David MichaelisThe $1.4 billion, 97,000-member ASSET Super is considering merger partners as a way of increasing its footprint in modern awards and pre-empting any Government moves to encourage consolidation – and there is a ‘back to the future’ twist to one of the rumoured suitors.

The multi-industry fund is understood to have had recent discussions with the Australian Meat Industry Superannuation Trust and Sunsuper, which ultimately proved fruitless, but is said to now be talking with the $18 billion NSW public sector accumulation fund, First State Super. Any deal arising from these talks could see First State Super’s CEO, Michael Dwyer, gain responsibility for ASSET members for a second time after a stint as general manager of the fund between 1995 and 2004. ASSET’s chair, David Michaelis, who has just been elected president of the Australian Chamber of Commerce and Industry, is said to be a driving force behind the search for a merger partner.

The successor to Dwyer in running ASSET’s trustee office, John Paul, said it was inappropriate to comment on specific discussions, but said funds would be “silly to ignore” the recent ASFA Conference speech of Jeremy Cooper, in which the Government’s chief superannuation reviewer said there should be about 27 funds only.

While Paul doubted there would ever be enforced consolidation of super funds, he said there was now a clear fiduciary duty for trustees to consider mergers where they may be in members’ best interests, and there was also a regulatory impetus toward scale.

“Ten years ago you’d probably say the industry didn’t spend enough on compliance and good governance, but now the regulatory bar has been set very high, and when you make it over the hurdle one year, APRA is probably going to set it higher the next year. It’s a much more rigorous review process, we’ve been spending a lot of money and energy on it and it’s not going to get any less,” Paul said.

Apart from the prospect of a larger fund staff to deal with this regulatory burden, Paul said a merger could also assist the portability of ASSET members’ accounts by increasing the fund’s footprint across the new ‘modern’ awards, which are being set by the Australian Industrial Relations Commission and are to due to commence on January 1.

ASSET was a fixture across many of the old NSW-based awards, such as that for clerks, but in the first tranche of national ‘modern’ awards it found itself not mentioned at all. The fund has since “got on the front foot” and is now mentioned in 34 of the awards, plus has applied to be included by ‘variation’ in 13 that it initially missed, however Paul said a merger with a larger fund would undoubtedly assist the coverage.

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