The two super funds recently signalled that they would be teaming up to pool their members’ retirement savings, which would combine Hostplus’ $55 billion in managed assets with Maritime Super’s $6 billion.
The transaction, which is still subject to approvals, would see Hostplus take control of how members’ savings are invested through its Pooled Superannuation Trust – supposedly allowing both funds to take advantage of broader investment opportunities, lower their investment fees and gain other cost and scale benefits.
But in a letter to APRA, Liberal senator Andrew Bragg has blasted the arrangement, insisting that maintaining separate trusteeships across the two brands would not reduce costs for members.
The deal instead perpetuates “persistent poor performers like Maritime Super, which is dark red on APRA’s own heat map” Mr Bragg wrote, warning it runs against the regulator’s goal to pressure underperforming funds to merge or exit the industry.
“…It seems inappropriate for poor-performing super funds to be put onto life support via a quasi-merger,” Mr Bragg wrote to the regulator.
“It would only lock in poor investment returns and entrench unnecessary operating costs, such as retaining a separate trustee board and management structure. Worst of all, it would do these two things whilst continuing to collect compulsory superannuation guarantee contributions.”
The senator also implied the new entity would be in operation “solely for the benefit of related parties”.
“Why should maritime workers continue to pay more than $2.5 million in annual directors and executive remuneration to run a shell company?” Mr Bragg asked.
APRA deputy chair Helen Rowell revealed the regulator is monitoring the transaction, in a responding letter to Mr Bragg.
“The proposed transaction you have raised does not require the exercise of a formal approval power by APRA; however, it is currently the subject of supervisory enquiry by APRA with both trustees,” Ms Rowell wrote.
“We expect the trustees, particularly of the fund making changes to its investment management arrangements, to show that the new approach is in members’ best interests. This applies not just to the specific management of its investments, but more broadly to any consequential changes that flow from them.”
But APRA will take action to protect members if a trustee has not demonstrated that members’ best interests were prioritised, or if a trustee fails to meet its obligations, she added.
APRA declined to comment further on the transaction.
