Aussie Pension Merges With Westscheme to Form $40 Billion Superannuation Powerhouse

(February 11, 2011) — AustralianSuper, Australia’s largest pension fund, is set to merge with Westscheme to form a $40.2 billion fund with 1.7 million members.

“This merger is all about putting members first,” Westscheme CEO, Howard Rosario, said in a statement. “Members will continue to receive locally based services and stand to gain significantly from low long-term costs, access to a wider range of benefits and products and strong long-term investment performance.”

According to independent research group SuperRatings, about 50% of funds in the not-for-profit sector will consolidate over the next three to five years, spurred by the long-running Cooper Review of Australia’s retirement savings industry. The Cooper Review, chaired by Jeremy Cooper, is designed to overhaul the governance, efficiency, structure and operation of Australia’s Superannuation System. The review has called for fewer, larger funds to enhance stability, making it harder for small funds to compete, unless they find a larger partner.

The AustraliaSuper-Westscheme merger represents the second biggest merger since November, when First State Super and Health Super announced plans to join forces, creating a $28 billion fund.

According to AustralianSuper, a due diligence process is expected to be completed by April, and if the process proceeds as planned, the two funds will merge on June 30, 2011. The merger is expected to benefit Westscheme members from AustralianSuper’s size, security and expertise. Westscheme currently has over 210,000 members, $3.3 billion in funds under management, and over 26,000 employers.