AvSuper is expecting to sign a heads of agreement to merge with Australian Retirement Trust (ART) this quarter.
In a May update webinar, Michael Sykes, chief executive at AvSuper, said the due diligence between the two funds is almost complete and the next stage would be signing a heads of agreement.
This is expected to be completed by the end of July.
The two funds signed a memorandum of understanding (MOU) in February after an earlier deal with Commonwealth Superannuation Corporation (CSC) failed to progress.
Sykes said: “To date, due diligence has progressed as expected with no significant issues uncovered and is now nearing completion.
“We are working with all relevant parties in planning for the transition.
“If we continue as we anticipate, we would look to sign a heads of agreement with ART within the next two months.
From there, we will be looking to finalise a date for the transition with our administrator Mercer.”
He acknowledged the administration change of member records would be the most time-consuming part of the merger but noted ART had already completed several recent mergers.
“ART have done a number of defined benefit scheme transfer and they have estimated six to nine months to execute that so I’m thinking, assuming we progress with the heads of agreement, we would be looking at early 2024, first quarter of 2024,” Sykes said.
Sykes also referenced comments from members who questioned why the merger is necessary when the fund is performing well.
“The impetus for the merger remains, regardless of accolades and positive numbers on spreadsheets. The phrase ‘past performance is not a indicator of future returns’ is relevant to the situation we are in,” Sykes said.
“Many things are factored into the long-term sustainability of a fund and changes in the overall landscape of the industry as well as changes in the demographics of our member base certainly impact our long-term sustainability.
“This is about sustainability, it’s becoming increasingly difficult for a small fund like us to remain competitive with the range of services and technology provided to members.”
