Would-be merger partners First State Super (FSS) and Health Super have already agreed the structure of the successor fund’s board, with the smaller funds’ directors appearing willing to sacrifice for the sake of member interests.
The $28 billion successor fund, slated to come into existence on July 1 next year, will be chaired by existing FSS independent chair Thomas Parry, while the other eight FSS positions – four nominated by Unions NSW, four by the NSW State Government – will be retained.
Health Super, meanwhile, has secured four seats on the successor board, which will house 13 directors in total.
The chief executive officer of Health Super, Chris Clausen, said three principal sponsors of the fund – the Health Services Union, the Australian Nursing Federation and the Victorian Healthcare Association – would each drop from two representatives on the Health Super board to one rep each on the successor fund board. Aged & Community Care Victoria will retain its seat.
Clausen will be deputy chief executive of the new scheme, reporting to current FSS chief, Michael Dwyer, who confirmed he made the initial approach to Health Super earlier this year.
Dwyer said a working committee had been established with several streams which would look at all the major service providers to the two funds.
An important area of commonality is JPMorgan Worldwide Securities Services, which Clausen said would be important in ensuring a successor fund transfer could occur by the self-imposed July 1, 2011 deadline.
However, rationalisation will be necessary in most other major areas of service provision.
In asset consulting, FSS has had a long relationship with JANA, while Towers Watson has advised Health Super since 2002.
FSS sources group insurance through MetLife, Health Super through AIA.
FSS uses the NSW Government-owned member administrator, Pillar, while Health Super administers itself.
There will also be investment mandates to streamline, although it’s likely this task will fall mainly to the existing FSS investment team, under chief investment officer Mark Sainsbury. Clausen said the Health Super CIO position, recently vacated by Brendon Shepherd who’s returned to his home town of Perth, may not be replaced, although he said there were at least several months of business-as-usual at the fund to consider.