NewsmakersMarch 23, 2022

Three Australian Funds Merge to Create the Country’s Second-Largest Retirement Fund

Officials hope that the mergers will reduce management fees and increase retiree benefits.

Reported by Anna Gordon

Three of Australia’s pension funds, Sunsuper, QSuper and Australian Post Super Scheme have merged to create a new pension fund called Australian Retirement Trust. Ian Patrick of Sunsuper will be the fund’s CIO.

Sunsuper and Qsuper were the first to merge to form the Australian Retirement Trust on February 28. The funds together have approximately $164 billion (A$220 billion) in assets under management.

Australian Post Super Scheme will formally merge with the other two funds on April 30, 2022. Australian Post Super Scheme has $6.2 billion (A$8.3 billion) assets under management according to its most recent annual report. Together, the three funds will have more than $170 billion in assets under management.

One of the primary purposes of these mergers is to reduce management fees, according to press releases.

“As the second-largest super fund in the industry, we’ll leverage our size and scale to seek out world-class investment opportunities for our members and deliver enhanced products and services and lower fees,” Australian Retirement Trust’s CEO Bernard Reilly said in the press release.

The process to merge the firms began a few years ago. Sunsuper and Qsuper had been in talks for two years, and finally announced the planned merger a year ago. Australian Post Super Scheme had been considering merging with Sunsuper even before then.

“Three years ago, the Australian Post Super Scheme initiated a review of the best ways to serve the long-term financial interests of our members and we are delighted that this competitive process sees us choosing to make a successor fund transfer into Australian Retirement Trust,” said Mark Birell, the Independent Chairman of Australian Post Super Scheme in the press release.

This is an ongoing trend in Australia. Fifteen Australian super fund mergers were announced in 2021, according to KPMG Australia. In many cases, poor-performing funds were pressured by regulators to merge with larger, better-performing funds.

According to a recent JP Morgan survey, approximately half of Australian pension fund leaders expect these mergers to increase. A quarter of them predict that in the near future, Australia will go from having 174 retirement funds to less than 50.