AvSuper has announced that it’s weighing up the pros and cons of a potential merger.
In a statement, AvSuper CEO Michael Sykes revealed that the fund is now considering whether AvSuper members would be better served by a different or larger fund.
“Following discussions with board, team and external partners, we are now considering if AvSuper members would be better served in a different fund with more resources at its disposal,” he said.
Mr Sykes acknowledged that regulators like the Australian Prudential Regulation Authority (APRA) had been openly encouraging smaller and sub-$10 billion super funds like AvSuper to merge.
Speaking at a recent Financial Services Council webinar, APRA executive board member Margaret Cole expressed disappointment at the persistent underperformance among a minority of Australia’s super funds.
While retail funds have historically been able to avoid scrutiny due to gaps in APRA’s data collection methods, Ms Cole said that new performance tests introduced by the recent reforms would put an end to this era for the sector.
“For funds struggling with poor performance or lack of scale, these changes will only increase current sustainability pressures,” she predicted.
In response to these calls and broader changes faced by the aviation industry, AvSuper said that it will be beginning an Expression of Interest (EOI) process.
This process will see the fund enter into conversations with a select group of Super Trustees about the prospect of a potential merger.
“At the end of the day, our first and last priority is our members, and we will do whatever is required to deliver the best outcome to them,” he said.
Ultimately, Mr Skyes said that any potential merger partner will be measured by its benefits for members.
He also emphasised that this was the beginning of a process that would take some time to complete.
“If a merger did become the best option for AvSuper members, it would likely take at least a year or more to be finalised,” he noted.
In the meantime, AvSuper said that it will continue to engage with and inform its 6,000 members and meet regularly with its staff, the unions and other partners.
“For more than 30 years, AvSuper has remained committed to giving its members the best super fund it can offer, steering the organisation and members through many industry changes,” Mr Sykes said.