Superannuation Minister Nick Sherry's announcement that the government will provide temporary tax relief for merging superannuation funds has paved the way for fund mergers to begin.
In December the government said it would provide an optional capital gains tax (CGT) rollover for capital losses arising from CGT events happening under a complying fund's merger with a superannuation fund regulated by the Australian Prudential Regulation Authority (APRA).
The Association of Superannuation Funds of Australia (ASFA) welcomed the decision.
"With the financial crisis we had 10 funds that were in the middle of merging, but they were unable to do it because the losses were so great," ASFA chief executive Pauline Vamos said.
"We have been pushing for months for this and we are thrilled with Senator Sherry's decision as it will enable the mergers to go ahead."
As a result, maritime industry funds Stevedoring Employees Retirement Fund (SERF) and the Seafarers' Retirement Fund will merge from 1 March to form Maritime Super.
SERF chief executive Peter Robertson said the merger was initially anticipated for January, but the plans were stalled due to capital losses incurred between June and October 2008.
"The merger couldn't go ahead without tax relief as the losses continued to mount to a level where costs of merging couldn't offset the future gains," Robertson said.
"Once Senator Sherry's announcement was made it was clear that we could go ahead with the merger and we can get all the member communication ready."
Maritime Super will have 27,000 members and just under $3 billion in assets under management.
Vamos said other funds such as Legalsuper were set to follow and formalise mergers after the government announcement.
