Former minister surprised by APRA’s proactivity on super mergers

Mike Taylor

Managing Editor/Publisher, Financial Newswire

13 December 2022

A former Federal Financial Services Minister has expressed surprise at the “proactive” manner in which the Australian Prudential Regulation Authority (APRA) dealt with him regarding superannuation fund mergers after he became chair of an industry superannuation fund.

Former Labor Assistant Treasurer, Nick Sherry, who earlier this year became chair of TWU Super, described APRA as having been “highly active to the extent I thought some of their thoughts were intruding into the prerogative of the trustee”.

Discussing the situation as part of a superannuation roundtable conducted by Financial Newswire, Sherry acknowledged that APRA had “genuine concerns” about the size and scale of superannuation funds.

He also referenced the failed merger bid between TWU Super and EISS Super which had occurred before he became chair, noting that a lot of time and money had been invested in the merger attempt.

“…without going into the details, one of the two issues that APRA discussed with me when I became chair was fund mergers, given the failure we’d been through and two, what was our process going forward if we were to consider a merger with a fund,” he said.

“They were highly interested and active in ‘nudging’ our process going forward. Highly active to the extent I think some of their thoughts were intruding into the prerogative of the trustee which clearly has the duty to initiate oversight and determine the process,” Sherry said.

The former minister said he understood the safeguards and requirements put in place by APRA were necessary, but as someone who had been involved in five prior fund mergers he found “APRA appears to have become much more proactive in its oversight and I think some of that has not been appropriate”.

Another participant on the Financial Newswire roundtable, NESS Super chief executive, Paul Cahill said he believed Sherry had raised issues that warranted to being investigated.

He said that NESS Super was a small fund that had frequently had the merger question put It and “we will ultimately do what is in the best interests of our members”.

“But, if anything, this merger talk has made us match fitter,” he said.

NGS Super acting chief executive, Natalie Previtera said that as a relatively small fund below APRA’s notional $30 billion in funds under management benchmark she was conscious of the pressurefor mergers.

“But we have our sustainability matric and, additionally, our member outcomes metrics and we seek to meet those,” she said.

Deloitte superannuation consultant, Russell Mason, said that at the end of the day he believed merger decisions were the prerogative of the trustees.

“In many cases they may decide a merger is a good thing, but it really comes down to what the trustees are looking to achieve in the best interests of their members,” he said.