The proposed merger between Queensland’s two largest superannuation funds – Sunsuper and QSuper – would create Australia’s largest not for profit superannuation entity but it can only happen with the acquiescence of the Queensland Labor Government.
That is because QSuper started off life as a State Government employees superannuation fund and, although being public offer a couple of years ago, is still subject to the Superannuation (State Public Sector) Act 1990.
Just as importantly, the chair of Sunsuper, Andrew Fraser is a former Queensland Labor Treasurer.
Both Fraser and QSuper chair, Karl Morris confirmed the reality of the merger talks in a statement issued late on Monday but made it clear that the proposal was in its early stages, declaring “whether or not the consideration proceeds beyond preliminary discussion is dependent on many factors”.
However, the discussions are taking place at a crucial time for superannuation funds as the Australian Prudential Regulation Authority (APRA) seeks to establish its member outcomes regimes and implement its so-called outcomes “heat maps”.
While neither Sunsuper nor QSuper are regarded as being investment performance laggards, a merger of the two organisations would create a significant entity encompassing substantial in-house investment capability, financial planning and fund administration.
The merged entity would boast nearly two million members and close to $180 billion in funds under management, making it larger than AustralianSuper at $166 billion.
Importantly, the merger talks follow on from Sunsuper’s completion of a merger with AustSafe Super earlier this year and a change in chief executives from Scott Hartley to Bernard Reilly which took effect from last month.
Interestingly, delivering satisfactory investment returns does not appear to have been a problem for either Sunsuper or QSuper, with FE Analytics revealing that the balanced options for both funds returned within the first quartile over one, three and five years to 31 October 2019, except Sunsuper's fund over the one year where it returned within the second quartile against its peers.
Source: FE Analytics
*Performance calculated to 31 October 2019