Successor Fund Transfers – Make Sure You Can Chew Gum And Walk At The Same Time


In five years, many superannuation funds that exist today will not be here because of underperformance, or because the advantages of a merger are deemed to be in the best interests of members. Industry consolidation is moving faster than ever, and for those funds pursuing a successor fund transfer, the ability to chew gum and walk at the same time is essential.

QMV recently hosted a panel of industry leaders to discuss the challenges and opportunities that scale, efficiencies and consolidation present:

  • The Hon. Nicholas Sherry – Former Federal Minister and Chair, Household Capital

  • Rose Kerlin - Group Executive, Membership, AustralianSuper

  • Katherine Kaspar – CEO, Kinetic Super

  • Josh Wilson – CEO, GROW Super

  • Wendy Colaço – Principal Consultant, QMV (moderator)

Clockwise: The Hon. Nicholas Sherry, Rose Kerlin, Wendy Colaço, Joshua Wilson, Katherine Kaspar


Having been involved in many SFTs, I know this subject matter is always fascinating and particularly compelling at present. While it is not easy to summarise 90 minutes of invaluable commentary from our panellists, I have made notes around seven key themes which were discussed, as follows:

  1. Should my fund continue to exist?

  2. When is a merger in the best interest of members?

  3. Delivering a healthy business in a merger.

  4. New entrants and new technology.

  5. Mergers must deliver what members really want.

  6. Why would big funds want to merge with smaller (or underperforming) funds?

  7. There is another way to merge.


Giving up your baby is hard to reconcile, but the industry has now seen many hundreds of mergers and is getting quite good at it. The panel was immediately united on the position held by Mr Nicholas Sherry, former federal minister and chair at Household Capital, that the industry has reached the point where we can no longer ignore funds that under perform long-term against their peers.

“A trustees’ fiduciary duty is not just about running a fund, as important and critical as that is, it's about fundamentally asking the question, should my fund continue to exist?” Mr Sherry said.

Mr Sherry highlighted the extent of consolidation over the past 15 years and observed that the current rate of consolidation is faster than ever.

Table 1: Superannuation industry consolidation by number of funds


Mr Sherry believes in five years, the profit for members sector will probably be down to 10 to 15 large industry funds, six public sector funds, he is not sure what will be left of corporate funds and says it’s hard to make a judgement on how many retail funds will remain because of the additional challenges they face.

Mr Sherry says that at some point, with some funds, APRA must become the driver to winding up poor performance. He also sees the potential of members pursuing common law action against trustees for failing to wind the fund up.

Ms Rose Kerlin, group executive, membership at AustralianSuper says the evidence is clear and grace periods are over, with more aggressive movement being required. Ms Kerlin noted that, in the wake of the royal commission, AustralianSuper has experienced a spike in new memberships.

“Community expectations have certainly increased. We're seeing new members moving to AustralianSuper who have voted with their feet,” she said.



Ms Katherine Kaspar was, for eight years, a member of the Kinetic Super board, which ultimately made the decision to merge with Sunsuper. After taking on the role as chief executive officer, she was charged with execution of that decision.

Katherine walked the audience through the board’s process in arriving at a merger and emphasised the importance of funds knowing exactly who their members are today in order to truly deliver what is in their best interests.

Kinetic performed intensive analysis on their member base and asked themselves a series of tough questions that ultimately started the merger conversation:

  • Do we have what it takes to give our members what they need for a better retirement outcome?

  • What can we do better today for our members?

  • Do we have, or need, a strong digital offering?

  • Do we have the best insurance offering?

  • Do we have, or need, advice capabilities? 

  • Do we know our value proposition?

The decision to move forward with the merger was about delivering more for members, with a planned cost of no more than the $20 per member (with that amount being delivered back to members, plus more, within six months).

Katherine’s executive role at Sunsuper, which ceases in May 2019, formed part of the strategy to successfully integrate the two funds while preserving Kinetic’s heritage: its members, employers, people and connection with the recruitment industry.



A key part of the merger strategy is to continue running a healthy business, which may involve restructuring existing operations.

“You need to remember you're not just running a merger. You are running two strategies. They are running in parallel and you must get them both right,” Ms Kaspar explains.

Ms Kaspar went on to provide the following example: "For instance, the sales team should not solely be carrying out new business development when current employers need extra support (because they also have choice of fund).” 

Continuous communication to staff, employers and members is essential: “If you don't have a process for communicating about everything, then you will fail and a failed merger is not a good outcome for anyone.”

Ms Kerlin added this important point to the discussion: “I think cost is just so important to make sure it doesn’t blow out, and I think sometimes we introduce complexity, instead of thinking about simple targeted excellence. Due diligence is a key component of any merger.”

Mr Sherry says that dealing with the process of a merger can be very challenging. The distraction for funds engaged in merger talks is very real, very resource intensive and occurs all while trying to deal with other business matters. He advised that dealing with the hot issues around culture is critical, indicating that difficult conversations such as future board roles and executive positions are better to happen first.



New entrants to the superannuation landscape offer a fresh set of ambitions around efficiencies, value propositions and knowing who your members are in real-time. Mr Joshua Wilson, chief executive at GROW Super, sees technology as a major factor in creating attractive value propositions, irrespective of fund size.

GROW position themselves as both a superannuation fund and a technology provider to other funds and have recently launched an administration platform based on blockchain technology called, ‘Tina’. The platform was named after Tina Arena and her song ‘Chains’.

Mr Wilson believes that technology is the biggest issue that needs to be addressed in superannuation, “We talk to funds that can’t get access to their data for 30 days after a marketing campaign or some other event and it just doesn’t have to be that way.”

Current administration providers, while effective, can be limited by intensive manual processes and complexity that doesn’t need to be there.

The challenges and limitations funds face with technology has driven GROW’s ambition to offer administration technology that enables configurability, scalability and supports multiple platform plug-ins.

“The world changes very, very quickly. We don’t yet know what new technologies will emerge, but we must be ready to respond to change. If your business is in creating unique value propositions and knowing who your members are in real-time, then being able to modularise value propositions will play a big part in that,” he said.

“And I think for us, probably the most exciting thing as a technology provider is that we don't have a fixed view on what the operating model needs to be, this should actually be driven by the funds and how it's going to deliver value back to the member.”

Mr Sherry expressed caution that new administration technology, artificial intelligence and cloud technology might be being seen as the solution to increasing returns and outcomes, stating: “It's about using your scale to have the most efficient and productive systems in place to maximise the outcome; just because you've got the latest IT admin platform, it doesn’t mean your returns will be any better.”

“I'm yet to be convinced that all of this will fundamentally increase the return to members beyond very good default diversified equities, infrastructure alternatives, at the lowest cost possible to the day you die.”

Mr Wilson however, holds a firm view that, “technology can enable things to be done cheaper, faster, better. If you've got something that's configurable and modular, the sky's the limit.”



Ms Kerlin has been involved in 17 mergers with AustralianSuper and their go-forward position with new partners hinges on four key member-focused outcomes:

  1. Members want strong long-term performance

  2. Members want low fees

  3. Members want a fund with a good reputation that engenders trust

  4. Members want high-value quality services, particularly around help and advice at the right time

AustralianSuper chooses mergers that are based on mutual respect and value, “Best-of-breed is really important. Just because AustraliaSuper got larger, it doesn't mean we always have the best things in place. You've got to look at what partners can offer for instance in technology or product or a service or a market or a cohort of members.”

Adding to the discussion, Mr Wilson points out that data is an essential component of forming a rich view of his fund’s members: “Getting a holistic picture of members builds more meaningful interactions and helps shape our value proposition.”

“We see technology as an enabler of new and different operating models for funds to deliver value back to members. A big part of that is saying no, to things that you’re not going to do because it doesn’t fit the value proposition,” he said.



Synergies really help. If prospective partners share external providers from the start, then some of the complexity can be removed and benefits can be realised more quickly.

Ms Kerlin stated that the opportunity to partner with really great brands is a driver for AustralianSuper: “It could be a new market, a new geographical area, access to new stakeholders. It could be relationships with advisors or another form of advantage.”

“It simply comes down to the question, is it an economical way to grow? And we know what growth brings us in terms of scale and what it delivers, particularly on the investment side.”

For seasoned funds who have completed multiple mergers, the time and the cost of SFTs have come down significantly. For instance, AustralianSuper recently performed an SFT that took only three months.

Mergers are a joint effort, but each case varies; for example, a substantially bigger fund will typically do “more of the heavy lifting” because they have in-house expertise and established processes.

Kinetic, a well performing $4 billion dollar fund, merged with Sunsuper a $56 billion dollar fund in May 2018. Ms Kaspar explains: “The real issue from Kinetic’s perspective was we were handing over our fund and we still needed to run a trustee office until the very last day. We needed to be in the driver's seat in terms of the key decisions that were being made.”

“We still needed to have a voice and it needed to be an equal voice irrespective of whether or not the Sunsuper team had more experience or different views (which they did, very respectfully, on occasion).”

“Our directors still had to put their hands on their hearts and say, actually, this is in the best interests for our members. So, it is a difficult balance to get right,” she said.

Ms Kerlin adds that AustralianSuper actively explore mergers with funds of all shapes and sizes - if it is in member’s best interests. Mergers need to be profitable within a payback period and, of course, it can’t be a big drag on performance.

“Bigger mergers are particularly exciting because they are great opportunity to create. You can have a more exciting vision, you can think about a new business model or you can think about disruption.”

“I think APRA could even play matchmaker for smaller funds who are in need or who might benefit from assistance starting a conversation.”

Another concept Ms Kerlin suggested to further assist smaller funds, is that APRA could consider waiving their levies to help off-set merger costs.



With extensive experience advising international pension and retirement entities, Mr Sherry offers a unique perspective to the scale and efficiency dilemma. In Canada, for example, the provincial old public sector funds have become the wholesale investment entities for a significant number of private sector smaller funds. This has allowed the private sector funds to keep their trustee entity and their identity, along with their full legal remit.

Mr Sherry stated: “We haven't done that in Australia, it’s a bit of puzzle to me as to why some of the funds haven’t collectively come together and set up a joint investment vehicle, maybe an admin vehicle as well, and collectivised and scaled those two areas and still kept separate trustees. It will be interesting to see if that emerges in the current round of discussions.”

Mr Sherry added that even in a full trustee merger, the separate cultural identification of members and employers, including some operational aspects, can be retained via some IT/admin platform solutions without a significant cost or weakening the scale gains elsewhere. 


I know you will appreciate there were additional insights from the panellists which I was not able to outline. I would like to thank the panellists for all their preparatory effort as well as their contributions on the day, and would also like to thank QMV’s Wendy Colaço for acting as moderator.

Thank you of course to our attendees for supporting the event and joining us in what was a very enjoyable session. We look forward to seeing you at our next event!



Stephen MahoneyExecutive Director


If your organisation is considering a successor fund transfer, QMV can help. We have performed dozens of SFTs, and can assist with advisory, strategy, negotiations, governance and delivery. For further information please telephone our office p +61 3 9620 0707 or submit an online form.

QMV provides trusted advisory, consulting and technology to Australia’s leading superannuation, insurance, banking and wealth management organisations.

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