Australia Pension Managers Explore Merger to Create A$22 Billion Fund

(Bloomberg) -- Australian pension managers Tasplan and MTAA Super are considering combining to create a A$22 billion ($15.4 billion) fund, in the latest sign of consolidation in the nation’s superannuation industry.

The two funds signed an agreement to explore a merger, according to an emailed statement Friday. Tasplan is a multi-industry not-for-profit fund managing A$9.5 billion in assets, while MTAA oversees about A$13 billion in retirement savings for workers in the motor trades and allied industries.

The announcement came after Statewide Super on Friday announced it was walking away from separate plans to merge with Tasplan and WA Local Government Super Plan. That three-way merger had a high risk of failing as it was too complex and may have taken two years to complete, Statewide Chief Executive Officer Tony D’Alessandro said in an interview.

Consolidation in Australia’s A$2.8 trillion pensions industry is gathering pace amid increased scrutiny of under-performing funds and growing pressure to cut fees and boost returns. A government-commissioned review earlier this year found the superannuation system, which invests the mandatory retirement savings of Australians, was beset by inefficiencies and called for more mergers.

Tasplan and MTAA said a deal could build a fund with “significant scale” that could deliver better returns for members.

Statewide, a A$10 billion fund which invests the retirement savings of local government workers, said it is in early-stage merger talks with three other pension funds.

“We’re certainly in the game of pursuing other mergers,” said D’Alessandro. “All things being equal, tripartite was probably a bridge too far.”

WA Super said in a statement it continues to be “open to future merger discussions if they are in our members’ best interest.”

KPMG sees a wave of mergers on the horizon, and expects the number of superannuation funds managed by the prudential regulator to halve in the next decade.

To contact the reporter on this story: Matthew Burgess in Melbourne at mburgess46@bloomberg.net

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Peter Vercoe

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