Hostplus' latest merger cements its spot among biggest super funds
Hostplus and Maritime Super announced the successful completion of their merger on September 4, marking a significant milestone for both funds.
Under the merger, approximately 23,000 Maritime Super member accounts totaling over A$6 billion ($3.9 billion) in funds under management, will transition to Hostplus.
This deal significantly boosts Hostplus' FUM to over A$100 billion ($65 billion), and brings it membership to around 1.7 million.
The deal also is likely to cement Hostplus' position among the top five super funds in Australia by assets under management, according to experts.
“Our scale enhances our capacity to transform our advantages into tangible benefits for our members,” a Hostplus spokesperson told AsianInvestor.
“The finalisation of Hostplus’ merger with Maritime Super is an exciting milestone and represents another step on Hostplus’ growth and evolution to becoming a lifetime fund of choice for an increasing number of Australians,” David Elia, the CEO of Hostplus, said in a statement.
Elia further highlighted Hostplus' commitment to delivering exceptional retirement outcomes through low administrative fees and sustained net investment performance.
The deal with Maritime Super is Hostplus' second merger in as many years. On April 29 2022, the super fund formally merged with Statewide Super.
As shown in recent data from the Australian Prudential Regulation Authority (APRA), Hostplus' growth trajectory is surpassing the industry average. While total superannuation assets grew by 7.6% for the year to June 2023, Hostplus' funds under management grew by 16.2% during the same period.
“Whether it be accessing a wider array of investment opportunities, keeping fees low, or investing in a diverse range of products and services specifically designed to assist our members on their journey to retirement, our commitment to enhancing the Hostplus experience for our members remains resolute,” said the spokesperson.
CONSOLIDATION TREND
The trend of consolidating superannuation funds is the result of new performance tests and fund comparison tools for the public provided by APRA in the past two years.
Most mergers within the Australian pension sector over the last few years have also been triggered by the declining performance of funds and pressure on costs caused by Covid-19, which prompted APRA to urge supers to consolidate.
In 2021, the country passed the “Your Future, Your Super” law, which requires superannuation funds to undergo annual performance testing. The test compares a super fund’s eight-year rolling annualised performance to APRA’s strategic asset allocation benchmark. If the fund underperforms by more than 50 basis points, it fails.
Under the new regulations, mergers and consolidation in the super industry have continued at pace. According to data from KPMG’s 2022 Super Insights report, there were 15 mergers between 2011 and 2016 that surpassed the A$500 million ($324 million) threshold. The transactions are commonly referred to as “successor fund transfers”.
Subsequently, between 2017 and 2019, this figure increased to 17. A further 17 mergers were reported between 2020 and 2021.
This year, EISS Super completed its merger with Cbus Super on May 12. There are a number of deals still on the table, including a merger between Vision Super and Active Super and a merger between Care Super and Spirit Super, which is expected to finalise in late 2024.
The Australian Retirement Trust (ART) has been particularly active, making three merger announcements just this year. On March 13, the A$240 billion super fund announced a memorandum of understanding to explore a merger with Alcoa Super.
Most recently on August 28, ART entered into a preliminary agreement with AvSuper, confirming the intention of both parties to proceed in good faith toward a merger by the first quarter of 2024.
Industry watchers expect more super fund mergers to be announced soon.