Insurance needs of members should not be neglected when it comes to superannuation mergers, according to Australian Retirement Trust (ART).
Speaking to the Australian Institute of Superannuation Trustees (AIST), Australian Retirement Trust insurance manager, Penny Paré, said the conversation between funds and their respective insurers should start as early as possible during merger discussions.
Paré previously held the same role at Sunsuper and went through the fund’s merger with QSuper to create ART earlier this year.
She said it was beneficial for funds to fold insurance in from the beginning of the merger but there were some occasions when it would be better to have a standalone agreement.
“In some occasions, you can ring-fence the existing insurance with the existing insurer, and then fold it into the main insurance offer at the next contract renewal.
“We adapt based on the needs of the partner that we’re merging with. Obviously, we’d like to make things as simple and streamlined as possible… we’d like to keep it quite clean for our members and members’ best financial interest to ensure that we don’t have too much complexity.
“We need to ensure we have the most optimal offering for our members. which is why we need to check all of that early so we can have the negotiations with the insurer from early on.”
The Superannuation Industry (Supervision) Act 1993 set out strict successor fund transfer (SFT) provisions which required trustees of the receiving and transferring funds to agree that the merger or transfer would have “equivalent rights” for the transferring members as they had prior to the merger.
Paré said ART had a panel of insurers it used which helping if a merging fund used a different one to them.
“We want healthy competition in the market. It’s a small market in Australia and the insurers are used to these kinds of conversations.
“One benefit from having a panel with a range of insurers is that we’ve already got the relationships established; we can have those conversations early. It might be a case of having them sign a nondisclosure agreement while we’re going through due diligence so that we can have that conversation.”