Pillar sale brings admin competition into focus

Competition needs to be maintained in the superannuation administration sector, according to a Super Review roundtable of senior superannuation executives conducted during the Conference of Major Superannuation Funds (CMSF).

Just months ahead of the NSW Government initiating the sales process for Pillar Administration, most roundtable participants agreed that it would be concerning if the owner of the largest superannuation administrator, Australian Administration Services (AAS), was allowed to acquire Pillar.

AAS is owned by Link Market Services which recently acquired Superpartners, making it the largest administration entity.

All the roundtable participants agreed that it was desirable and healthy to maintain competition in the administration space, with both EISS Super chief executive, Alex Hutchison and Kinetic Super chief investment officer, Paul Kessell pointing to their use of AAS but urging the maintenance of continued competition.

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Kessell said that at the moment Link was the dominant player in the market and that, given the barriers to entry, there seemed little interest from overseas players.

Pillar Administration chief executive, Peter Brook said he recognised that Link had been touted as an acquirer for the Pillar business — something which would give Link "close to 90 per cent of the total market".

He said that while third party administrators such as Pillar and AAS were not regulated by the Australian Prudential Regulation Authority (APRA), Pillar had held meetings with the regulator where it had been acknowledged that it was an area of interest.

Brook pointed to the fact that academic research had pointed to systems risk with respect to custodians.

"There are a lot more custodians than third party administrators and Link has its own systems and I can understand why APRA might therefore be concerned," he said.