Would-be merger partners First State Super and Health Super already have agreed on the structure of the successor fund's board, with the smaller fund's directors appearing willing to sacrifice for the sake of member interests.
The A$28 billion (US$27.6 billion) successor fund, slated to come into existence on July 1, 2011, will be chaired by existing FSS independent chair Thomas Parry. (Sydney-based FSS accounts for about A$20 billion of the total assets.)
The remaining seats on the successor board, which will have 13 directors in total, will be filled by four Health Super representatives and eight from FSS — four nominated by Unions New South Wales and four by the NSW state government.
The CEO of Melbourne-based Health Super, Chris Clausen, said three principal sponsors of the fund — the Health Services Union, the Australian Nursing Federation and the Victorian Healthcare Association — would each drop from two representatives on the Health Super board to one rep each on the successor fund board. Aged & Community Care Victoria will retain its seat.
Mr. Clausen will be deputy chief executive of the new scheme, reporting to current FSS chief, Michael Dwyer, who confirmed he made the initial approach to Health Super earlier this year.
Mr. Dwyer said a working committee had been established that would look at all the major service providers to the two funds.
An important area of commonality is JPMorgan Worldwide Securities Services, which Mr. Clausen said would be important in ensuring a successor fund transfer could occur by the self-imposed July 1 deadline.
However, rationalization will be necessary in most other major areas.
In asset consulting, FSS has had a long relationship with JANA, while Towers Watson has advised Health Super.
FSS uses the NSW government-owned member administrator, Pillar, while Health Super is self-administered.
FSS sources group insurance through MetLife, Health Super through AIA.
There will also be investment mandates to streamline, although it's likely this task will fall mainly to the existing FSS investment team, under Chief Investment Officer Mark Sainsbury. Mr. Clausen said the Health Super CIO position, recently vacated by Brendon Shepherd, may not be replaced, although there are several months of business-as-usual at the fund to consider.
Michael Bailey is editor of I&T News, a unit of Investment magazine in Sydney.
