Minimum disruption for members was the guiding principle for AUST(Q) Super trustees when selecting AustralianSuper as their merger partner.
The 19,000-member, $181-million Queensland-based fund has agreed in principal to a merger with Australian Super later this year after a 12-month process.
One of the initial considerations of trustees was to retain its local base.
“One of the options was to merge with other small funds in Queensland, but it was felt by the directors that we would then become another merger target and wouldn’t it be better to go somewhere large to start with,” said Bob Henricks, the chair of AUST(Q).
However, AUST(Q) still hopes to retain its local connections through a deal with AustralianSuper that will retain AUST(Q) directors for a year or two as an advisory board.
Henricks said part of the logic was ensuring member-service levels did not decrease.
“We believe the board will continue as an advisory board for a period of time. That is attractive to the directors, as we can still at least have some input into it until we are comfortable with the way things are heading. We are also trying to ensure that our client service people are retained.”
A key element in ensuring a smooth transition for AUST(Q) members is that AustralianSuper uses the same administration platform as AUST(Q).
“To go to virtually any other fund means a change of administrator and that is an enormous disruption. That was one of the things that said to the directors, this is a bit of a no-brainer, in that it is not going to cost a penny for administration change.”
Involved with the fund since it launched in 1985, Henricks said he was sad to be cutting ties with it but that ultimately the members’ interests were best served by moving to a fund with greater scale and choice.
“AUST(Q) has always been a very simple fund, there has been no investment choice, but we get more and more demand for that and for pensions – products we do not supply. I impressed on the other directors that the only decisions we can make are in the members’ interests and if we feel that it is in their best interests to move into a larger fund, well that is what we should do.”
Henricks admitted the burden of regulation was also a factor in the trustee directors’ decision.
“The regulator can just regulate you out of business as a small fund if they really want to. It would have been very simple for APRA to go round the funds and say ‘Well, you have got a balanced option that fits into the MySuper thing that can be the MySuper product rather than have all these new regulations and requirements. They do not look at it practically enough in my view.”
To June 30, 2012 AUST(Q) returns were 6.01 per cent over three years, 0.26 per cent over five years and 5.71 per cent over 10 years.