The Australian superannuation market is consolidating further as a result of regulatory reform
Two medium-sized Australian superannuation schemes, Mine Super and TWUSUPER, have entered into talks to explore a merger.
The two schemes said they have entered into a preliminary non-binding memorandum of understanding (MOU) to explore a merger of the two funds.
TWUSUPER manages around A$6.3bn (£3.46bn) of assets and Mine Super has assets of about A$12bn (£6.59bn). If the merger goes ahead, the combined scheme would become one of the top 30 superannuation funds by size and have over 150,000 members.
In a joint statement, Mine Super chair Christina Langby and TWUSUPER chair Nick Sherry stated the two funds share a strong heritage of member first values as historically important profit to member industry superannuation funds.
In a statement they said: "Mine Super and TWUSUPER share the vision of creating a sustainable fund which protects and promotes the interests of workers in the mining and transport industries. In accordance with the MOU, both Mine Super and TWUSUPER are currently undertaking extensive due diligence to determine the best outcome for all members and mining and transport operators arising from a prospective merger. It is anticipated that this process may take several months.
"During this period both funds remain committed to delivering the best outcomes for their members and will keep members informed of important milestones. There is no change to any aspect of any member's funds, investments or insurance as a result of entering into this preliminary non-binding MOU."
PP analysis
This deal is the latest in a line of scheme mergers in Australia - mergers that are being driven by regulatory initiatives, particularly the government's so-called Your Future, Your Super reforms which came into effect last year.
MTAA Super and Tasplan merged to become Spirit Super on 1 April last year. On 28 February this year, the merger of QSuper and Sunsuper to become Australian Retirement Trust was finalised. And the Australia Post Superannuation Scheme merged into Australian Retirement Trust on 30 April. In addition to this, Maritime Super is set to merge into Hostplus in September 2023.
These reforms require the Australian superannuation industry to improve its efficiency, transparency and accountability - requiring all providers to conduct an annual performance test and holding those that fail to account.
Developments in the Australian market are particularly important for the UK as they point towards the likely direction of travel in our own market as our own master trusts scale up and regulations develop - and it is likely that the Department for Work and Pensions as well as The Pensions Regulator will be keeping a close eye on what is happening both in Canberra and at the Australian Prudential Regulation Authority.
The UK has a long way to go however. Our largest master trust - Nest - has assets of £24.6bn, which is large for the UK, but only a fraction of the size of the largest superannuation scheme in Australia, AustralianSuper, which has assets of around £150bn.
