First State Super and Health Super have attempted to short-circuit the reason many proposed super fund mergers do not proceed, with the structure of the board of the successor fund already largely agreed. Meanwhile, the woman whom most expect to be CEO of the combined Equipsuper-Vision Super has revealed that one-third of the new scheme’s $8 billion will be managed internally. First State Super (FSS), the $20 billion NSW public sector scheme, and Health Super, the $8 billion Victoria-centric health industry fund, announced last month they were in due diligence to merge. FSS CEO Michael Dwyer made the initial approach earlier this year. The yet-to-be-named 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 CEO 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 each on the successor fund board. Aged & Community Care Victoria will retain its seat. Clausen will be deputy CEO of the new scheme, reporting to Dwyer, who said a working committee had been established with several streams to 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 merger 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 CIO Mark Sainsbury. It’s no secret that FSS has been considering several potential merger partners, however Dwyer said Health Super was a natural fit: “The funds have a long history of working together on industry associations in the health and community sectors, we both exist purely to benefit our members.” Merging with FSS delivers Health Super the presence in NSW it has long desired.