Superannuation funds need very strong member alignment to overcome the high upfront costs involved in mergers, according to LGS Super chief executive Peter Lambert.
Lambert was unconvinced that the scale advantages of mergers could significantly reduce costs for members, given the high costs involved in the process.
“Part of any merger is making sure each party’s interests are protected, and by doing so you’re straight away avoiding some of the scale arguments that are promoted as part of merging,” he said.
However, he said some mergers made sense, citing the 2008 union of closely aligned Print Super and Just Super which created MediaSuper.
“Funds have to be careful if they are going down a merger path that they don’t destroy the alignment of [member] interests. Once they do then the only thing they’re competing on is price – they’re not competing on service,” he said.
One key differentiator for LGS Super is its commitment to providing financial planning to members, Lambert said. He confirmed that LGS Super had completed the insourcing of 12 former FuturePlus financial planners into the LGS office, along with the addition of another planner in Tamworth who will service the New England region of New South Wales.
While financial planning services are currently free for LGS members, Lambert said that would change under the Future of Financial Advice regime, with the fund transitioning into a fee-for-service model.
One new offering for LGS members will be a fixed interest option open to retired members from 1 December 2011. The fund will approach a panel of banks and buy a tranche of the best term deposits available, and members will be able to opt-in on an annual basis, Lambert said.
