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Warning on survival of small funds
Superannuation industry commentator HLB Mann Judd has criticised recent suggestions by the government’s Stronger Super consultative committee that smaller super funds can survive the super reforms without needing to merge with larger super funds.
The chair of the peak consultative group for the Government’s Stronger Super reforms committee, Paul Costello, recently sought to reassure the super industry that smaller super funds could consider ways of working together to manage the costs of the super reforms and shouldn’t feel forced to merge with each other.
HLB senior manager for superannuation Neil Howard said it would be hard to see a situation in which super funds wouldn’t need to merge with each other to cope with the super reforms.
The industry was moving towards massive rationalisation because of the reforms, Howard said.
Howard said some super funds would find it impossible to work together to manage costs because they relied on a whole range of third party support staff, including different consultants and different legal advisers, that would want input in that process.
“While they are similar funds, they do have distinct differences and industries that they play in, and I think there are going to be some insurmountable obstacles for some funds to go down that particular route,” he said.
However, there were already some smaller funds that combined investments to find scale, Howard admitted.
Small niche super funds should think about providing services outside their usual niche fund members to increase scale, Howard said.
AUTHOR
Mike Taylor
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