More superannuation fund mergers are on the cards following the federal government's announcement last week that it will extend optional capital gains tax (CGT) rollover relief for merging funds.
"The initial proposal had a number of impediments which, if unchanged, would have made it difficult for super funds to merge. These have now been addressed, which will enable super funds to merge with greater ease and enable the government to achieve its objectives of rationalising the industry," PricewaterhouseCoopers partner Marco Feltrin said.
As a result of the extension, Legalsuper will comtinue with two planned mergers.
"If the extension hadn't come through, I doubt these mergers would have kept going," Legalsuper chief executive Andrew Proebstl said.
"The most recent changes are quite pragmatic and will help facilitate further industry rationalisation. The extension of the time frame to 30 June 2011 provides a little bit of extra time for funds to work through the merging process."
Proebstl said Legalsuper, a veteran of seven mergers, would look for more potential mergers.
"We're certainly acquisitive and if there is an opportunity we would go after it," he said.
Australian Meat Industry Superannuation Trust chief executive John Livanas also signalled his fund had started looking at possible mergers.
While he would not comment directly on where the fund was at in the process, Livanas said the government's announcement would give funds the time to undertake the merger process with due care.
"The reality is that scale matters and merging is one way of achieving better member benefits," he said.
Under the changes, the government has extended the time frame of the rollover by one year to 30 June 2011.
The measure has also been expanded to permit previously realised net capital losses held in the transferring superannuation entity to be moved to the continuing superannuation entity and the rollover or transfer of any revenue losses to the continuing entity.
It is anticipated draft legislation will be released by the government within the next month.
"Whilst the press release is welcomed, it is limited in detail. This issue should be clarified once the draft legislation is released," Feltrin said.
