What’s the impact of a potential QSuper and Sunsuper merger?

What impact will a potential merger of Brisbane-based QSuper and Sunsuper have on their 1850 employees and 2 million members? We take a look at how it will affect you.

QUEENSLAND’S two biggest super funds - QSuper and Sunsuper - are in early discussions about a possible merger.
It would create Australia’s largest super fund, managing $182 billion in retirement savings for two million members.

Currently the industry heavyweight is AustralianSuper, which has $170 billion in funds under management.

WILL THEY ACTUALLY MERGE?

It’s too early to say. QSuper and Sunsuper said in a statement on Monday night that they were “engaged in preliminary, non-binding discussions about a possible partnership”.

They said they would keep members “informed of any material decisions’.

WILL THERE BE JOB LOSSES?

Most likely. However, QSuper and Sunsuper say it is too early to speculate on details of any merger, such as job losses. Both super funds are based in Brisbane and together employ more than 1850 people. QSuper has a workforce of 1200 and Sunsuper has 650 employees, according to their websites.

Usually when companies merge they look to cut costs by trimming staff numbers in areas where there are duplications.

WHAT DOES IT MEAN FOR MEMBERS?

Potentially it would make a merged fund more competitive. QSuper currently has 585,000 members and Sunsuper has 1.4 million. Presumably a merged fund would try to boost its size by trying to attract more members, especially in southern markets.

With more funds under management, a merged group would be able to invest in more highly-prized blue-chip assets around the world. For instance, QSuper already owns a roughly 11 per cent stake in Heathrow Airport.

Both QSuper and Sunsuper are among the country’s best-performing super funds and would want to stay at the top of the pack.

For the year ending September 30, 2019, the QSuper - Balanced fund was the best performer in the country with a return of 11.07 per cent, according to research firm SuperRatings. Sunsuper for Life - Balanced took out 6th spot with a return of 8.23 per cent.

WHY MERGE?

QSuper and Sunsuper could potentially save costs, boost funds under management and develop a bigger national profile through a merger.

Australia’s $2.8 trillion super industry is also coming under more regulatory scrutiny since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The Australian Prudential Regulation Authority has called on more super funds to merge in order to provide a more transparent and simpler offering to members.

In April, VicSuper and First State Super – funds focused on state government employees in Victoria and NSW respectively – announced plans for a merger that would create a $110 billion fund. Meanwhile, Brisbane-based Club Super in September announced it would merge with larger rival Hostplus.

Also, with almost half of QSuper members aged over 50, industry watchers say the 107-year old fund needs the influx of younger peopleprovided by the merger with Sunsuper to avoid more funds eventually flowing out than in.

While both funds are among the best performers in the country, they need to establish a broader, younger membership base to stay competitive.

SuperRatings managing director Jeff Bresnahan said QSuper, which was originally founded to manage the retirement nest eggs of public servants, had many members either retired or approaching retirement. About 23 per cent of its members are aged over 60 while a good proportion of Sunsuper’s are still in their 30s.

“The risk for QSuper is that eventually there would be more outflows of funds than inflows,” said Mr Bresnahan.

AT A GLANCE

QSuper chairman Karl Morris. Picture: AAP Image/Glenn Hunt

QSuper

Established: 1912

Head office: Brisbane

Board chairman: Karl Morris, also executive chairman of Ord Minnett and chairman of the Brisbane Broncos.

Directors: Walter Ivessa, Steve Christie, Mary-Anne Curtis, Sandra McCullagh, Beth Mohle, Ruth McFarlane, Shayne Maxwell and Kate Ruttiman,

CEO: Michael Pennisi

Funds under management: $113 billion

Members: 585,000

Employees: 1200

Main type of members: Current and former public servants and their families

Sunsuper

Sunsuper chairman Andrew Fraser

Established: 1987

Head office: Brisbane

Board chairman: Andrew Fraser, the former Treasurer of Queensland

Directors: Michael Clifford, Elizabeth Hallett, Mark Harvey, Jenni Mack, Michael Traill, Ben Swan, Georgina Williams

CEO: Bernard Reilly

Funds under management: $69 billion

Members: 1.4m

Employees: 650

Main type of members: Broad range of industry workers, including from health and hospitality sectors