QSuper CEO Michael Pennisi will leave Queensland’s largest pension fund after the $ 200 billion merger with Sunsuper, but thousands of employees have been guaranteed their jobs.
Bernard Reilly, Chief Executive of Sunsuper, will serve as Chief Executive of the combined fund following the merger, which is expected to close in September.
The funds announced on Monday that the merger had now moved into the « Heads of Agreement » phase, with the guarantee that the funds’ 2350 employees will be employed under management for at least two years.
Queensland’s two largest super funds announced plans to merge in 2019 to create the country’s largest retirement fund, managing $ 200 billion in retirement savings for nearly two million people. Pension Fund Goliath will be able to compete against industry giants in the southern state like AustralianSuper and retail funds run by the major banks.
A 13-member Board of Directors consisting of the existing directors of QSuper and Sunsuper will oversee the merged fund. Don Luke, the current chairman of QSuper, will be chairman.
Industry watchers say the merger will give Queensland workers the financial power to invest in higher quality assets around the world and that competition is increasing in the supersector, which has seen a wave of mergers.
According to the Royal Commission in the Banking and Financial Services Industry, dissatisfaction with the performance of retail pension funds has increased.
QSuper was founded in 1912 to manage the nest egg for civil servants’ retirement. Today QSuper has 600,000 members with a fund volume under management of over USD 120 billion. Founded in 1987, Sunsuper manages $ 80 billion for its 1.4 million members.
Mr Pennisi announced to the QSuper Board in 2019 that he intended to leave the fund at the end of his contract in October 2020 but that he had extended his term to oversee the merger. Mr. Pennisi, a former executive of the Queensland Investment Corporation (QIC), has been credited with moving QSuper from a public servants-only organization to an open-ended fund.
Mr. Reilly, a former executive director of State Street Advisors, has been the executive director of Sunsuper since 2019. Mr Reilly said he has pledged to lead the merged fund until at least December 2022 and will spend most of the time in Brisbane, where the merged fund will be headquartered. The combined fund does not yet have a name.
« It is a great honor to be selected to lead the integration of two successful pension funds into a world-class Brisbane-based company, » said Reilly.
QSuper, which lost its monopoly on running the state pension fund in 2017, has faced competition from Sunsuper in recent years. Both funds lowered fees and stepped up their marketing efforts as they tried to keep their members.
QSuper and Sunsuper, both of which are Profit for Member funds, are among the top performers in the country and have won a number of industry awards in recent years.
The merger comes as the industry watchdog, the Australian regulator, has urged more super funds to merge to reduce the complexity of the super system.
VicSuper and First State Super – funds focused on state government employees in Victoria and NSW, respectively – announced plans for a merger in 2019 to create a $ 110 billion fund. Brisbane-based Club Super is merging with bigger rival Hostplus.
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