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Super fund mergers tipped to persist following BT, Mercer announcement

3 minute read

Head of Mercer Super predicts super mergers will persist over the next few years.

On Thursday, Westpac and BT Funds Management announced they have entered into a heads of agreement to merge BT’s personal and corporate superannuation funds with Mercer Super.

Speaking to InvestorDaily post the announcement, Tim Barber, head of Mercer Super, said the wave of consolidation in the superannuation sector is set to continue.

“You’ll sort of see the market consolidate to a point and we’re seeing it with the industry funds. I think a healthy industry would have some good global players, like Mercer here in the market, brining that breath of capability and experience from around the world, but also some local players,” Mr Barber said.

The merger of BT’s Personal and Corporate superannuation funds into the Mercer Super Trust is set to create a $65-billion superannuation fund with over 850,000 members.

As for the key objectives motivating mergers in the super sector, Mr Barber said they are abundant.

“The performance test and the actions of the government and the regulator are but one element, but I think the substantive point behind that is scale and efficiency are really important to be able to drive value for members, so I think super funds are finding that mergers are an opportunity to deliver on that,” Mr Barber explained.

And according to Mr Barber, Mercer intends to use its new scale to invest in improvements to member services.

“Whether that’s the digital tools we use, offering education and just delivering a good member experience through also an expanded investment choice, it gives us the ability to also invest in those qualitative aspects as well as the obvious fee reductions that are the headline of this particular merger,” Mr Barber explained.

Following the merger Mercer has pledged to reduce fees by over 25 per cent for most of its members.

Commenting on the merger on Thursday, BT Super chair, Gai McGrath, said the creation of this “larger” superannuation fund will increase its potential to deliver improved performance, lower fees, and broader member services.

“Mercer, whose multi-manager funds manage more than $500 billion in assets globally, has been a retirement and investment specialist in Australia for more than 40 years,” Mr McGrath said.

“They are well placed to support our BT Super members and participating employers into the future.”

Members are set to receive all the relevant information about the merger in the coming months ahead of its expected completion in the first half of the 2023 calendar year.