Two values-based super funds, NGS Super and UCSuper, are investigating a merger and both parties are adamant the larger NGS Super is not taking over its potential partner.
NGS, with $4.1 billion in FUM, dwarfs UCS’s $315 million, and similarly the membership numbers are weighted towards NGS at 89,000 compared with UCS’s 12,000.
Complimentary membership profiles and economies of scale are two of the main reasons given for the merger.
Anthony Rodwell-Ball, CEO of NGS Super – which represents non-government education and aligned sectors as well as being a public offer fund – said the as-yet unnamed fund would be looking to combine the best practices from both funds.
“This is not a takeover, even though the different relative sizes would suggest this,” he said. “We’re definitely looking for best-of-breed practices. Everybody does a few things very well, and we will be concentrating on what both parties do excellently.”
UCSuper is an industry fund for Uniting Church employees – excluding ordained ministers – which has grown out the various State-based church funds since the 1980s.
UCSuper’s general manager, Neil Kent, said both funds had Mercer as their administrator, with the contact coming through that third party. Kent said that NGS’ Rodwell-Ball and UCS’s chair, Bruce Binnie, had met through ASFA and that tentative talks about a merger had been proceeding for more than 18 months.
With yesterday’s signing of an memorandum of understanding to merge, the funds were now in due diligence checks until September.
The best interests of the members were foremost, Kent said, in the fund’s pursuit of the merger. “There’s the cost factor for small funds. We can’t compete with the big funds,and MySuper adds another layer of cost.”
NGS’s Rodwell-Ball was open about the lessons his fund has learned about mergers, having finished three in recent years, the most recent being with CueSuper which was completed last month.
“We’ve learned that you need to be very open and transparent with members,” he said. “Their three big concerns are investment returns, service, and inconvenience.” A good communications strategy, appropriately pitched, was essential, he said.
Staffing would be maintained “because a lot of corporate history” was crucial for managing the change, he said. Sharing a common administrator, Mercer, would also smooth the transition.
Insurance was still something to be agreed upon among the trustees of both funds, as NGS draws this service from CommInsure and UCSuper from IUS.