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Statewide and Local confirm merger commencement
Statewide Super and Local Super have set the merger wheels in motion after a few hiccups, including the lack of capital gains tax (CGT) relief having thrown the process awry.
Statewide chief executive John O'Flaherty will maintain his position under the new company structure, which will merge the two boards and assets under single ownership commencing 1 July 2012.
O'Flaherty said that while a number of things would help smooth the "drag-and-drop merger" including both funds' use of asset consultant Jana and MetLife for insurance, they were "full-steam ahead with the preparation work" required to totally integrate both funds.
"What we intend to do from commencement date is keep the various schemes running in standalone manner and then we'll progressively sort out custodian, member investment choices, mergers of the schemes and an administration platform," O'Flaherty said.
The funds will maintain separate custodians, with Local Super looking to JP Morgan and Statewide using National Asset Services, but O'Flaherty said they would undergo a process to select a single custodian within 12 months.
He said the coming year would bring unification of the funds' insurance schemes, streamlining of advice services and integrated accumulation and pension schemes.
"Ultimately we will have the one of everything," O'Flaherty said, although Local's direct benefit (DB) scheme will remain separate.
The DB was sorted after a legislative amendment in May enabled ongoing funding from councils.
The Government's refusal to allow CGT relief in light of MySuper legislation threw another spanner in the works, but O'Flaherty said he was optimistic the legislation would eventually be passed.
"Every time the Government has granted relief in the past, there's been bipartisan support and legislation's always been passed well after the event and been backdated," he said.
O'Flaherty said integrating administration may tip them over the year mark, but they would try to organise everything by 1 July 2013 to provide a united front in light of MySuper.
The merger will see 20 Local Super employees move in with 100 Statewide Super employees to manage 160,000 members and a combined $4 billion in funds.
O'Flaherty said the board and the chair were chosen and the funds just had to finalise the details, which would be done through a series of shareholder meetings throughout the month.
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