First State Super, Sydney, and WA Super, Perth, will merge by Nov. 30, creating a superannuation fund overseeing almost A$130 billion ($92.4 billion) in retirement assets.
First State Super, which has A$125 billion in retirement assets and WA Super, with A$4 billion, announced in early March that they were exploring a merger.
Executives for both funds stressed the benefits that additional scale would bring participants in keeping fees as low as possible while offering a broad range of investment options.
WA Super's relatively small size has made it "increasingly challenging for us to implement regulatory changes and continue to maintain competitive fees for the services we provide," Fabian Ross, CEO of WA Super, said in a news release Thursday.
Larger super funds have the size and scale to maintain the low fees and diverse range of investment options that ultimately spell better long-term outcomes for participants, he said.
Deanne Stewart, First State Super's CEO, in the same news release said the volatility and economic downturn super funds have faced this year demonstrate "why we believe that size and scale matters."
The merger in November would be First State Super's second over a five-month stretch — putting the super fund at the forefront of the industry's broader consolidation trend of recent years.
On July 1, First State Super merged with VicSuper, a A$25 billion, Melbourne-based super fund, to cement its position as the industry's second-biggest superannuation fund, Ms. Stewart said. The biggest is AustralianSuper, Melbourne, with about A$180 billion in assets.
That scale has allowed First State to "invest in ways that others can't" and "deliver a positive return" for its more than 1 million participants, despite the current challenging market conditions, she added.
Earlier this month, First State Super announced it will change its name to Aware Super in mid-September.
