Tasplan chair Naomi Edwards said the superannuation fund will be busy bedding down the $23 billion merger with MTAA Super but would welcome a new partner if the right fund came along.
“The the newly-merged super fund is big enough in the current market but obviously the market will keep moving,” she said, adding that the fees they deliver to members are currently very low.
The two industry funds on Friday finalised an unconditional agreement to merge on 1 October 2020.
“We need time bed down the transition of admin services which will keep us very busy until next October,” Edwards said. That said, we do have a core belief that mergers can deliver economies of scale so in the longer term, I’m sure will be open to having further discussions with funds.”
MTAA Super oversees more than $13 billion in retirement savings for workers in the motor trades and allied industries. Tasplan is a multi-industry not-for-profit fund managing $10 billion in assets.
The decision to merge which was wholly expected by the market and follows a comprehensive due diligence process that began in July.
The combined fund’s corporate and trustee functions will be based in Canberra, with satellite offices in Tasmania and other locations. MTAA Super’s administration services will be moved in-house to Tasplan’s Hobart facilities.
A merger between MTAA Super and Tasplan will see Leanne Turner, chief executive of MTAA will head up the new super fund following the merger of with Naomi Edwards staying on as chair of the new board.
Edwards, has been chair of Tasplan since 2011, having led the led the Hobart-based superannuation fund through several mergers which have seen the fund grow from $2.4 billion to just over $10 billion.
After eight years as chair of MTAA Super, John Brumby will leave the fund. The former Victorian Premier and Treasurer became Chancellor of LaTrobe University earlier this year.
Brumby and Edwards said the combined fund’s scale will provide efficiencies that can be passed on to members through improvements to products and services, low fees and strong returns.
“Scale will help drive efficiencies and provide greater buying power,” added Brumby. “This merger will enable us to negotiate top quartile investment management fees and take advantage of fee scale discounts. This means better value for money for our members.”
Wayne Davy, current chief executive of Tasplan will continue in that role until merger completion date.
The merger activity comes just as the prudential regulator is bringing pressure to bear on funds in a bid to ensure members get economies of scale from bigger funds
“The current political and legislative landscape will likely mean an increase in super fund mergers over the next few years,” Edwards and Brumby said in a release. “By merging now, MTAA Super and Tasplan have chosen to be on the front foot and stay in control of our destiny, and member outcomes.”
Other mergers are in the works as the $2.7 trillion industry consolidates QSuper and Sunsuper have confirmed they are in talks about merging to create Australia’s largest superannuation fund with assets of more than $180 billion.
First State Super is merging with Vic Super to create Australia’s third largest profit-to-member super fund, managing $120 billion in retirement savings.
The $45 billion Hostplus and Club Super last month finalised their merger and Equip Super and Catholic Super have also joined forces in a landmark $26 billion deal.
Earlier this year, Tasplan had attempted a three-way merger with Statewide Super and WA Super but that was abandoned after negotiations failed to yield a result that was viewed favourably by all parties.
At the time, Edwards said Tasplan’s biggest challenge this year will be to keep growing while navigating merger prospects and regulatory changes.
“If you have a unique value proposition, and fantastic technology solutions, then you can thrive with a small scale,” she said.
“However, I think many super funds kid themselves over how unique their value proposition is.
“While distinct values and ethics can create a niche super fund, for the majority of funds, I think scale is necessary to maximise member outcomes – through lower fees, more in-sourcing of investments, and greater investments in technology.”
