An ASIC report notes the boom in demand for this asset, saying it heightens the need for “better-quality data” about the size of this sector where estimates range between $1.8 billion and $188 billion.
CPA Australia has weighed into the debate about the cost to oversee the industry, adding its voice to those who argue the fee structure favours the larger funds.
Mercer lets go of 50 staff in looming restructure
By Greg Bright
Mercer will retrench up to 50 staff in Australia and New Zealand as part of a restructure which got underway before Christmas. Positions are being made redundant across a number of divisions, mostly in Melbourne and Sydney, including superannuation administration and sales.
While the move follows similar head-count and other cost reductions at big funds management companies including MLC, AMP and BT Financial Group, in Mercer’s case it coincides with the intended takeover of Pillar Administration.
Under the deal with the NSW Government, which was announced on December 2, its agreement to sell Pillar for $35 million to Mercer included the retention of all Pillar’s Award-covered employees based in the Illawarra region of NSW for at least two years. They are thought to number at least 350 of the total Pillar staff of about 700. Mercer also has to retain various job “functions” in the Illawarra, a sensitive state electorate, for at least 10 years, although this requirement is not considered to be particularly onerous.
Pillar, which claims to have been providing administration services for the NSW Government superannuation entities for a 100 years, houses most of its staff in Coniston, near Wollongong. The Sydney office, in a building shared with its biggest client, NSW First State Super, consists mainly of audit and managerial functions.
Ben Walsh, Mercer managing director and pacific market leader, based in Melbourne, was on leave last week and unavailable for comment. However, the firm issued a formal statement to Investor Strategy News following our request for further details about the redundancies.
The statement said: “Mercer is pursuing a strong global and local growth agenda. In 2016, Mercer successfully executed its growth strategy as evidenced by its acquisitions of Pillar Administration and Extra Textual, new business wins such as Orica & Ixom, and a first of its kind strategic partnership with Virgin Money Australia.
“Through strategic hires and the Pillar acquisition, Mercer’s employee numbers grew to around 2,000 across Australia and New Zealand in 2016. Mercer provided career opportunities to its people through local and global promotions, secondments and rotation programs.
“Mercer continually assesses its workforce to ensure the right capabilities are in place to help our clients and customers make the best decisions.”
Prior to acquiring Pillar, Mercer had just 2 per cent of the super administration market in Australia, much of which is still in-house administration by some big not-for-profit funds and the major commercial funds. Pillar, when completed, will take Mercer’s share to about 6 per cent.
The biggest outsource provider in the market is Link Group, which has about 34 per cent of the total (including in-house admin, assessed by assets) market. Link also bid for Pillar but was questioned by the Australian Competition and Consumer Commission, in a preliminary view, on the grounds of potential market dominance.
