Mergers continue in industry fund sector
AGEST Super and AustralianSuper have finalised plans to merge their two funds and create a Public Sector Division of AustralianSuper.
The merger will see AustralianSuper create a new Public Sector Division, which will capture and build upon AGEST’s position as a fund of choice for current and former public sector employees, and enhance AustralianSuper’s size, scale and national presence.
Both AGEST and AustralianSuper expect that the merged fund will result in improved retirement outcomes for members of both funds, adopting the best from both funds.
AGEST CEO Cath Bowtell said today: “This is good news for AGEST members. The Board of AGEST has identified around $13 million per annum in savings through the merger. These savings, which are a result of lower administration and investment costs, will go straight to members’ accounts.”
“We have also been able to secure changes to AustralianSuper’s offer to reflect the current features of AGEST that our members value.”
As a result of this merger, AustralianSuper will expand its member services in Canberra and Darwin, introduce daily switching, and roll out a very competitive pension fee.
“AGEST members have told us that they value these services and I’m pleased that AustralianSuper quickly recognised the benefit to their members of extending these to all members of the merged fund” said Ms Bowtell.
However, the merger is not guaranteed, with both funds approving the merger only if the government grants the merging funds relief from realising capital gains and losses when assets transfer from AGEST to AustralianSuper.
“The AGEST Board has approved the merger, subject to receiving Capital Gains Tax rollover relief. Without rollover relief, the merger will not occur” said Ms Bowtell.
“Having identified savings for our members, we are keen to get on with the merger and deliver those savings into members’ accounts. For every month of delay, we fail to realise $1 million worth of savings” said Ms Bowtell.
Ian Silk, Chief Executive of AustralianSuper agrees that the uncertainty is preventing mergers from occurring and disadvantaging members. “AustralianSuper firmly believes that members of funds in a merger, must not be placed in a worse tax position after a merger then before the merger.”
“This is a revenue-neutral policy for the Government, because if this change is not made most trustees will simply not proceed with mergers whilst there is a financial disadvantage to their members.”