MTAA Super and Tasplan have entered into a binding memorandum of understanding to investigate a merger of the two funds, which if successful would create a national superannuation fund worth more than $22 billion with 328,000 members.
Tasplan is a multi-industry profit-for-members super fund, managing $9.5 billion in assets for members Australia-wide, while MTAA Super is a national industry-based super fund that has served the motor trades and allied industries for 30 years, managing close to $13 billion.
Tasplan is the default fund for Tasmanian public servants and has 130,000 Tasmanian members which represents half of the total Tasmanian workforce.
The MOU will allow a potential merger to be thoroughly assessed by all parties, with the best interests of members being the key deciding factor.
Fund Chairs, Naomi Edwards of Tasplan, and John Brumby of MTAA Super, said this was an exciting opportunity to create one fund that would provide services nationally to the combined membership, with priority on providing quality services and outcomes for members.
“We anticipate that the increased scale will deliver efficiencies that can be passed on to members by way of product and service improvement, competitive fees and returns,” Ms Edwards and Mr Brumby said.
“While there is still much work to be done, we are excited by the prospect of building a fund of significant scale, enjoying widespread national membership and offering further improvements in benefits to our members over time.”
Three way merger dropped
The news comes shortly after an three way merger between Tasplan, Statewide Super and WA Super was abandoned after negotiations failed to yield a result that was viewed favourably by all parties.
“We have a member-first culture and we are open to merger propositions as long as it is proven to be in member’s best-interest,” Statewide Super chief executive,” Tony D’Alessandro, said.
“Statewide Super has a positive position in the marketplace and this means the breadth and scale of a merger would need to make sense for the fund and our members.
“We will continue to look for ways to deliver greater value, improve returns, and negotiate better insurance cover, and we know that sometimes mergers are the best way to deliver this.”
WA Super recently negotiated a successful merger with Concept One in February, 2018, adding over 20,000 members from the latter to the fund.
Super funds have been under pressure to merge for some time to ensure members get economies of scale from bigger funds. The Australian Prudential Regulation Authority and the Productivity Commission have both been pressing for mergers to get rid of underperforming funds.
In April legislation passed Parliament that gives APRA enhanced powers to force underperforming funds to merge.
Deputy APRA chair Helen Rowell said at the time the legislation significantly strengthened APRA’s ability to drive trustees towards improved outcomes for members and to address underperformance at an early stage.
“Previously, APRA could only direct a superannuation trustee after a contravention of the law had taken place, or where APRA believed there was an urgent, material threat to members’ interests. The new directions power gives APRA the ability to intervene at an early stage before members suffer significant harm,” Mrs Rowell said.