In what is believed to be a precedent in the industry funds sector, two superannuation funds have signed a memorandum of understanding to pursue a merger based on the formation of a master trust structure.
Importantly, the two funds, NGS Super and QIEC, represent those working in the education sector and their merger would still result in a comparatively modest $7 billion 128,000 member fund.
The chair of QIEC Super, Terry Burke, and the chair of NGS Super, Dick Shearman have issued a joint statement confirming consideration of the move.
"The master trust structure is well used by retail funds to gain benefits of size while still enabling marketing of individual funds within the trust," Shearman said.
"We think the master trust structure can make good sense in the industry funds space."
He said the boards of QIEC and NGS Super had executed a Memorandum of Understanding with the intention of investigating the Master Trust model to gain greater economies of scale while enhancing the benefits for both member groups."
"It is important to both NGS and QIEC Super that a viable and significant fund which understands the particular needs of education workers continues to exist in the non-government education space."
"Initial discussions have identified potential benefits and synergies and we now want to examine those more fully in a formal due diligence process."
Burke said that QIEC Super was the leading fund in Queensland non-government education and while the master trust structure could bring added benefits to its members the trust arrangement would also provide further presence for NGS Super as the only truly national fund in non-government schools.
"No decisions have been made ahead of the due diligence and while investments and insurance are obvious areas for potential integration, other aspects such as brand, marketing and fund administrator can continue with current arrangements under the master trust model." Burke said.
NGS Super manages approximately $7 billion and has 100,000 members nationally. QIEC manages approximately $1 billion and has 28,000 members, mainly based in Queensland. Both funds serve the non-government/independent schools sector, with QIEC having a larger presence in the early childhood education segment than NGS.