Merger Creates Australia's Second Largest Pension Fund

SYDNEY (Reuters) – Super First State and VicSuper announced Tuesday the signing of a binding agreement on the merger, creating the second largest pension fund in Australia, while the pressure of regulation pushes for consolidation.

The new pension or retirement fund would be worth about $ 120 billion ($ 84.3 billion) in badets under management for more than 1.1 million workers, the non-profit funds said in a statement spouse.

AustralianSuper is the largest, managing about $ 160 billion Australian.

A merger was "broadly seen as a progressive and pro-active step for both funds, and perfectly suited to the growing consolidation trend in the pension sector," the funds said in a statement.

The funds had revealed that they were in merger discussion earlier this year.

A public inquiry last year found that the high fees imposed by some fund managers in the $ 2,200 billion Australian mandatory retirement system were eroding workers' savings and that many of them were not interests of clients before theirs.

As a result of the investigation, the regulator has promised to step up control and push the underachievers out of the sector.

Wayne Byres, chairman of the Australian Prudential Regulatory Authority (APRA), said last week that "continued pressure" to lift prudential standards had contributed to the consolidation.

"I'm pretty confident that we will potentially see a lot more outflows from the sector in the near future," he added.

First Super and VicSuper stated that the signed agreements would follow a period of due diligence and should result in a merger with only one board of directors by June 30, 2020.