Super mergers must deliver on returns

Superannuation funds will need to deliver on a combination of reduced fees and improved investment performance if they are to justify merging with another fund, according to new research undertaken by Super Review.

The Super Review Super Outlook survey conducted at last month’s Conference of Major Superannuation Funds (CMSF) and sponsored by EISS Super revealed an industry not willing to endorse further mergers unless there were positive benefits to members.

Asked what factors they believed would make fund mergers consistent with the best interests of members, a significant majority of respondents pointed to the need for improved investment performance with the second most important issue being reduced fees.

Fifty four per cent of respondents regarded improved investment performance as being a necessary benefit to flow from a merger, while a similar number nominated reduced fees.

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Importantly, the survey data also pointed to industry executives and trustees expecting that while fund mergers were likely to continue, it would not be at the same rate as had occurred in the past.

While 79 per cent of respondents said they expected merger activity to continue, just over 20 per cent pointed to a narrowing of the circumstances under which such activity might occur.