Superannuation mergers: what to do if your fund joins the party

A boom in superannuation mergers means millions of nest eggs are now being run by new funds. Here’s what the experts say.

Merger mania in Australia’s superannuation system is leaving many people wondering who is now looking after their nest egg.

In the past two years many of the nation’s biggest super funds have been involved in mergers or merger discussions, and this week the second-biggest super fund – Australian Retirement Trust – was formed from the merger of Sunsuper and QSuper.

More are in the pipeline. Hostplus is planning mergers with three smaller super funds, while AustralianSuper and Cbus are among others taking action.

Several super funds that failed regulator APRA’s new performance tests last year are being merged into bigger, stronger funds.

But what does it mean for members who suddenly find their retirement savings being managed by a different, larger fund?

Australian Retirement Trust CEO Bernard Reilly says while there will be some changes, it’s often the case that “the whole is even greater than the sum of the parts”.

He says the increased size and strength of merged funds can deliver more investment opportunities, better products and services, and lower fees and costs.

Australian Retirement Trust chief executive Bernard Reilly suggests members keep updated.

”Members should firstly take comfort and have confidence in the fact that super fund trustees are bound to act in their members’ best interests.” Reilly says.

“If a merger is proceeding, the due diligence will have satisfied the trustees of the legacy funds that the members of each fund will be better off in the merged fund.”

Reilly says funds will communicate to their members details of the changes and any impacts on their account.

“Even if there is nothing to do – which may well be the case – it’s a good idea to keep updated with the merger process and how your fund is evolving, including any changes to fees and insurance arrangements,” he says.

JBS Financial Strategists CEO Jenny Brown says life insurance held in super may be affected any time a fund changes insurance underwriters, so this is important to check.

She says super fund members should also check how a merger impacts their fees – not just administration fees, but also underlying investment management charges.

“Don’t go jumping ship, but make sure you understand what’s going on and what are the ramifications in terms of cost changes to you and your superannuation portfolio,” Brown says.

“Make sure to keep an eye on correspondence coming in, and as always seek advice – whether it’s calling your super fund hotline or seeking independent advice from a financial adviser.”