The merger between StatewideSuper and Local Super would have been called off if Treasury had not provided capital gains tax (CGT) relief, StatewideSuper chief executive John O'Flaherty said yesterday.
"That was a dealbreaker; it enabled us to proceed with the merger," O'Flaherty told InvestorDaily.
"Had we not got CGT relief, we would not have merged."
After Treasury announced it would end the CGT relief in September 2011, StatewideSuper wrote a letter to Financial Services and Superannuation Minister Bill Shorten to request an extension of the relief.
Although O'Flaherty said the merger would not just be dependent on a positive response from Shorten, the big impact on members would have prevented the trustees from signing off on it.
"[The impact] was in the millions, so it was significant," he said.
"That number changes quite regularly considering what is going on in the market, but the number was sufficiently high to preclude the trustees from signing off on the merger."
The Association of Superannuation Funds of Australia (ASFA) also pointed to the CGT-relief as the key to the successful merger of the two funds.
"Mergers such as the one that has been completed [yesterday] would not have been possible without the federal government providing CGT relief upon merger," ASFA chief executive Pauline Vamos said.
O'Flaherty said the merged fund would assess how it could streamline the investment portfolio over the next 12 months.
"We've adopted what we call a drag-and-drop merger, so we're doing all the things necessary to operate as a single fund from 1 July," he said.
"We've got one board, I'm the chief executive and over the course of the next 12 months we are going to look at how we are going to integrate all aspects of our business.
"At the moment, we are running all of our schemes and plans separately, until such time as we will bring them together."
The process was helped by the fact both funds have the same asset consultant in JANA.
"We've already started work on how we bring asset classes together, but at the moment we are keeping the existing mandates with the existing fund managers, so nothing has changed as of the merger date, but over the next 12 months we will sort all of that out," O'Flaherty said.
The fund was also working through the options for establishing a MySuper option.
"We've done some work on MySuper and we've got a number of different options on how we might do that, but we haven't reached a conclusion yet," O'Flaherty said.
"But it has top priority from our point of view."
He said staffing levels at the merged fund were not expected to change.
"Both funds already run pretty lean staffing levels. The real synergies are more in how we can deliver more services for the same amount of effort," he said.
"We are also able to combine our financial planning services; by having a bigger bulk we are expecting to make inroads into there."
