While the White House’s economic nostrums are rattling the markets, the long-term outlook for commercial and investment relations between the two countries is positive, with a recent summit in the US further cementing ties.
The employer-employee split worked well when not-for-profit funds were in their infancy. Today, in an era of member choice and the growing demands of retiree members, it’s a model that fails to cut the mustard.
Vision on top in Active tie-up
Vision Super and Active Super have signed a successor fund transfer deed in an “exciting milestone” for a merger process first announced back in July 2022, with the date for completion set for 1 March 2025 and Vision as the successor fund.
The merger will create a new super fund with $29 billion in assets under management, bringing it to within spitting distance of the unofficial $30 billion figure that APRA believes is the floor for fund sustainability in the system’s current period of rapid growth and consolidation.
“We expect to see benefits for members over time including cost savings and greater economies of scale as time goes on as the merged fund will strive to deliver improved products and services,” said Vision Super chief executive Stephen Rowe, who is set to lead the merged entity.
The two funds are of similar size and have similar member bases – Vision is the rebranded Local Authorities Super, while Active is the rebranded Local Government Super (LGS) – though a large chunk of Active’s membership is defined benefit, bringing extra complexity to what is already a complex process and offering one possible explanation for why the merger has seemed to move slowly.
While Vision is set to be the successor fund, a number of decisions are apparently still up in the air, including the exact fate of the individual fund brands. The back office will be relatively easy to reconcile; both funds share a custodian in J.P. Morgan, while the combined fund will be internally administered using Vision’s existing Acurity Registry platform, with transition “well underway” in advance of the SFT date of 1 March 2025. Active’s administrator is currently Link.
“With over 100 years’ combined experience serving our members in local government across New South Wales and Victoria, the two most populous states in Australia, the merged fund is set to become the preeminent traditional local government fund in Australia,” Active Super chair Kyle Loades and Vision Super chair Graham Sherry said in a statement. “This merger represents a significant step forward in our mission to provide exceptional service and strong returns to our members across the country.”
News on the merger comes at an increasingly fraught time for smaller funds, with AvSuper merging into Australian Retirement Trust and TelstraSuper announcing that it would also pursue a merger despite the fact that it’s in “a strong and healthy position with positive net member growth”.
It also demonstrates that slow and steady organic growth has not been enough to keep smaller funds competitive with the gargantuan megafunds, with the largest now receiving inflows to the tune of the Active and Vision’s combined FUM every year and able to slash fees by distributing costs across millions-strong member bases.
