While ISA is responsible for overseeing collective programs on behalf of a number of industry super funds, AIST represents profit-to-member funds, including industry, corporate and public sector funds. Despite the unique nature of their lobbying approaches and initiatives, these organisations have reportedly been in discussions about a possible merger since the beginning of this year.
In a joint statement provided to InvestorDaily on Monday, AIST and ISA said: “The profit-to-member super funds that ISA and AIST represent have agreed to create a new organisation to be a strong and unified voice for their millions of members.”
“The new entity will build on the impressive legacies of achievements of both AIST and ISA and combine the knowledge, expertise and capabilities of those organisations to be a powerful advocate for super fund members on all systemic matters relevant to super and retirement,” the statement reads.
“As balances grow and more members reach retirement age, the long-term interests of members are best served by a compelling voice that is focused on protecting and growing their savings.”
The organisations confirmed that their boards, and their funds, will continue to work towards creating this new entity.
The merger between AIST and ISA reflects a trend seen across the industry where mergers have become commonplace due to mounting pressure on smaller funds to align with their larger counterparts.
Earlier this year, InvestorDaily reported that AustralianSuper and Australian Retirement Trust (ART) have each set a goal to reach $500 billion in assets under management by the end of the decade, in a landscape where Australia’s $3.39 trillion superannuation industry could be dominated by a small number of so-called “mega funds”.
Mergers and consolidation in the super industry have continued at pace in recent years, as funds are forced to respond to new regulations such as the Your Future, Your Super (YFYS) reforms, and seek out merger partners in the best interests of their members.
AustralianSuper is currently the dominant player in the industry with $300 billion in assets. Last year, the fund said that it planned to grow to $500 billion over the next five years.
Meanwhile, ART, which was formed from the merger of QSuper and Sunsuper, has over $240 billion in assets. Upon announcing its third merger so far this year, ART chief executive officer Bernard Reilly said that the fund was well on its way to achieving its target of $500 billion in assets by 2030.
Nearly a quarter of the super executives surveyed by J.P. Morgan last year, as part of its The Future of Superannuation report, predicted that the number of super funds would shrink to fewer than 50 by 2025.
