The 2,000 defined benefit members within AustralianSuper will be given the option to transition to Equipsuper during 2015, it was announced yesterday.
The deal will potentially see $700 million in defined benefit assets move out of the $82 billion fund and into $6.6 billion Equipsuper.
Speaking to InvestorDaily, Mr Schroder – who is AustralianSuper group executive for membership – said there are two reasons behind the alliance: a common administrator in Mercer, and AustralianSuper’s soon-to-be-finalised relationship with Link Group.
AustralianSuper entered into an agreement to sell its SuperPartners administration platform to Link Group in September 2014.
Assuming the deal goes through (it is currently in the due diligence stage, according to Mr Schroder), AustralianSuper’s administration will be handled by Link Group subsidiary AAS (Australian Administration Services).
“One of the reasons we [are transferring our defined benefit members to Equipsuper] is because of the greater capability that the relationship with Link Group will provide,” Mr Schroder said.
“This is a commercially strategic decision based on reducing complexity for AustralianSuper.”
Equipsuper executive officer for strategic marketing and communications Geoff Brooks said the amount of funds under management that flows to Equip depends on what the sponsoring employers decide to do.
“Some with small plans may decide to turn them over to accumulation … any members that aren’t will transfer into [Equipsuper],” he said.
Reflecting on the benefits for Equipsuper, Mr Brooks said his fund has the “specialisation and the scale with Mercer to make it attractive”.
Almost one third of Equipsuper’s members are in defined benefit schemes.
“[AustralianSuper] haven’t got the scale with Mercer now to keep the cost down for those defined benefit members,” Mr Brooks said, “whereas on the flipside, we’ve still got $2 billion of our $6.6 billion in assets in defined benefits at Mercer.”
