SYDNEY Dec 8 Australian pension fund legalsuper
said it is resisting pressure from the national financial
regulator for small funds to consolidate into larger entities,
even as some of its peers welcome the opportunity.
The Australian Prudential Regulation Authority is pressing
smaller not-for-profit pension funds to consolidate with the aim
of lowering management costs and giving them the scale to
compete for assets amid a global hunt for yield.
"The problem is that there is a fixation on growth for the
sake of growth, which can be a quick pathway to mediocrity,"
said Andrew Proebstl, chief executive of the A$3 billion ($2.2
He said legalsuper's purpose was exclusively to service the
legal sector and its specific needs.
The profile of the profession, for instance, has allowed
legalsuper to negotiate preferential terms with life insurers so
that premiums have not risen for six years, Proebstl said.
Every pension fund's situation should be evaluated on the
outcomes achieved for its members, he said. Therefore the
industry's focus on merging funds under A$5 billion was not
"Whether a fund is small, medium or large, it needs to have
clarity of purpose and can deliver better value for its members
relative to larger super funds," he said.
Australia's A$2.1 trillion pool of tax-advantaged retirement
savings, known locally as "superannuation" or "super" funds, is
among the world's largest after the U.S., UK, Japan and Canada
and is set to reach nearly A$10 trillion by 2035, according to
Equipsuper, which manages A$8 billion in assets, is said by
industry sources to be discussing a possible merger with Energy
Super to create a A$13 billion retirement fund.
($1 = 1.3464 Australian dollars)
(Reporting by Cecile Lefort; Editing by Eric Meijer)