FOR IMMEDIATE RELEASE
30th March 2010
The potential danger in
Superannuation Fund mergers
An industry fund CEO has called for greater awareness and consideration of the
impact of fund mergers on the current administration regimes.
Neil Cassidy, CEO of Tasmania’s industry super fund TASPLAN, says the
industry needs to address some specific issues in relation to potential multiple
mergers of super funds.
“I think there needs to be a more detailed analysis of the processes we may face.
I
have not seen any discussion around the logistics, and inherent dangers
involved in this industry consolidation, before we face major problems.
“In pursuit of scale, mergers are at the forefront of strategic planning for most
Trustees, however the consequences of multiple mergers have the capacity to
impact on the Custodians, Asset Consultants, Insurers, Trustees and
administrators.
“The Cooper review has alluded to consolidation in a bid for funds to achieve
economies of scale and reduce fees, but this belies the administrative minefield
we may be approaching, given the small number of administrators in Australia
who have the capacity to manage large funds,” Mr Cassidy said.
“The timing of any merger is crucial, and with many funds clamouring for
positioning now, the actual processes need to be defined; are they going to be
staggered and controlled or will there be a rush to merge?
“If, as an industry we are looking at multiple mergers over a short timeframe, say
two to three years, it is not improbable to see service providers involved in
multiple mergers (in and out) simultaneously, which will in turn place stress on
resources, costs, compliance, risk management, day-to-day processing,
reporting and member communications.
“I believe this will add more complexity to an already stressed industry and I
would expect that the regulators are preparing themselves for this situation. In
the event the service providers cannot cope with the volume of activity, the
previously well regarded worldwide reputation of the Australian industry will be
negatively impacted upon,” Mr Cassidy said.
“While the recommendation from the Cooper report seems altruistic at first
glance, without the necessary framework, it leaves the industry uncertain at a
time when this is the last image we want to portray to members.
“The failure of the industry to manage outcomes, or the collapse of a service
provider will result in untold damage to the industry and all stakeholders.
“We need more discussion around the potential problems and issues multiple
mergers can raise. If we demonstrate as an industry we have a cohesive and
well thought out set of processes around this type of activity, it’ll be much easier
to convince the members that this will indeed, be a better result for them,” Mr
Cassidy said.
For further information/comment please contact:
Mr Neil Cassidy
CEO TASPLAN
Ph: 03) 6270 4801
Mobile: 0417 034 357
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