If 95 mutual banks and credit unions have survived substantial consolidation within the banking sector, then smaller super funds should also survive, argued Mr Rodwell-Ball.
Despite the presence of the big four banks, the Bank of Queensland, Bank of Adelaide and Bendigo and foreign banks such as HSBC, the 95 credit unions “seem to have survived despite the fact there’s been massive consolidation within the credit union mutual sector”.
“So as long as you can keep your costs competitive, deliver really good investment returns, keep a meaningful relationship and a value-adding relationship with your membership, what’s the need to merge?” said Mr Rodwell-Ball.
Although it is difficult to see how super funds managing less than a billion dollars can possibly survive, many are operating in a strong niche position, he said.
“If they have a real value proposition for their membership and their membership is happy and, most importantly, they are managing to get the investment returns to beat the market or at least equal the market, why shouldn’t they survive?” he said.
Mr Rodwell-Ball did acknowledge, however, the benefits that NGS Super has seen from the increase in scale from a number of mergers in the past few years, with the fund decreasing its cost per member to below the industry median for the first time in six years.
He also noted the importance of only merging with like-minded funds.
Mr Rodwell-Ball said it would not make sense for NGS Super to merge with a super fund like Auscoal because that would dilute its basic value proposition and position it as a super fund for all Australians, similar to AustralianSuper.
“We don’t want to go competing with AustralianSuper; they have a very strong brand position,” he said.
He said it was vital the fund retain its culture and relevance to its membership. “You don’t want to dilute that by merging with every man and his dog in the industry just because it’s fashionable to do so,” he said.
