The $3 trillion pensions market is tempting for profit-seeking firms, but can they handle the heat of the superannuation wars?
, global investment consultancy Mercer will merge Westpac’s BT Corporate and Personal Super funds with its own Mercer Super Trust.
Once seen as the young, poor cousin to the skyscraper-dwelling funds operated by big banks and investment firms with centuries of portfolio management experience, they are now arguably the most powerful players in Australia’s capital markets. While some funds have experienced outflow, others have collapsed or been shut down. The ASFA lists 84 separate funds under the retail banner at May this year, down from 118 in 2018.
While Mercer has been operating in Australia for more than 40 years, Bryant says the BT merger is a “statement of intent” from the firm about its ambitions in the local market. In addition, Pennsylvania-headquartered Vanguard, the world’s second-largest asset manager with $10 trillion in AUM, is set toBlake Briggs, the FSC’s chief executive, is certainly pleased to have the injection of offshore capital into the local market he represents.
While the cuts might be advantageous in luring customers across from other funds, they also inevitably cut into profitability.Moreover, the very concept of profitability is controversial for some critics of the retail fund model. Labor’s Andrew Leigh, the deputy chairman of the powerful House economics committee in the previous parliament, has questioned whether any kind of “profit-taking” from retirement income vehicles is appropriate.