The rash of super fund mergers that were predicted in the wash up of the Hayne Royal Commission have begun with the merger of industry funds Hostplus and Club Super.
The two funds have now signed a successor fund transfer deed and the merger is expected to be completed by the end of October.
Hostplus is the much bigger party in the merger and has produced some of the best returns of all superannuation funds in recent years.
Hostplus manages about $42 billion of funds for 1.2 million members.
Many of those members came from Hostplus’ history covering workers in the hospitality, tourism and recreation industries but the fund is open to anyone and has benefitted from a lot of fund transfers after the Haynes Royal Commission effectively pointed out the high fees and poor performance of some for profit funds.
The Royal Commission findings led to a massive and continuing outflow from some for profit managers such as AMP (ASX: AMP).
Brings scale and lower fees for Club Super
Club Super is based in Queensland-based and manages about $600 million in retirement savings for 22,000 members, most of whom work at sporting and recreational clubs.
The feasibility of a merger has been examined since July and should be of particular benefit to Club Super members because administrations costs should fall due to the benefits of scale and investment performance should also remain strong.
Club Super chair, Sharron Caddie, said the merger shows that members’ best interests are at the forefront of decision-making by both boards.
“In executing the successor fund transfer deed, we are actively helping to bring enhanced services and benefits to our members and employers, while continuing to recognise and support the community and sporting clubs they work so tirelessly in,” she said.
Should be a win-win and fair to members
Under the successor fund transfer deed, care is taken to ensure that members of both funds are treated fairly.
Hostplus chief executive, David Elia, called the merger a significant and positive development for all involved.
Regulators such as the Australian Prudential Regulation Authority have been putting pressure on smaller funds to merge with larger funds if it benefits their members so there are expected to be many more mergers in the coming few years as there is a greater focus on lowering fees.