QSuper and Sunsuper have agreed to merge, after 15 months of negotiations, to become a single superannuation fund, making it Australia’s largest.
The move, announced on March 15, aims to integrate the two top-performing funds into a new entity with two million members and $200 billion in assets.
QSuper Chair Don Luke and Sunsuper Chair Andrew Fraser said the agreement would pave the way to create “an organisation of world-class capability” with the scale to deliver “outstanding services, greater efficiencies, and lower costs for members.”
The boards of both firms agreed that it was in the best interests of their member to sign a Heads of Agreement take the next step to “realise the potential of this merger.”
Queensland Treasurer and Minister for Investment Cameron Dick gave the nod to the deal, saying the government had ensured that fund members’ interests would be protected and the state’s interests would also be boosted.
“The Palaszczuk Government supports this proposal because it aligns with our vision to reinforce Queensland’s position as a preferred investment destination,” he said.
Under the agreement, both funds have agreed to find a path for the merged organisation’s structure and operation to deliver material benefits to each fund’s membership. Details are expected to be shared with their members during the coming months.
Current Sunsuper chief executive Bernard Reilly will become chief executive of the merged fund, and current QSuper chair Don Luke will serve as chair. While QSuper chief executive Michael Pennisi has confirmed he will be stepping down in September.
Further, all staff below senior management at both organisations have been given commitments of employment security for at least two years.
Superfund Mergers Set to Gather Pace
The merger between QSuper and Sunsuper is the latest in a string of deals that have seen an increasingly consolidated superannuation sector in recent years.The trend was accelerated last year, with the pandemic’s challenging market conditions putting greater pressure on funds to pursue the benefit of size and scale.
Some major deals include those between First State Super (rebranded last September as Aware Super) and Vic Super, Hostplus and Club Super, and Equip Super and Catholic Super.
The industry’s primary regulator, Australian Prudential Regulation Association (APRA ), has been encouraging mergers in the industry, citing the typically high fees —and in some cases, poor returns are associated with small funds as a valid reason for the change.
“APRA continues to pressure the trustees of poor-performing funds to merge or exit the industry unless they are able to materially lift their game,” it said. “APRA’s view is that there is a merger partner for all funds—it’s just a matter of finding the right one.”