Australian superannuation funds First State Super and VicSuper said Tuesday they've signed an agreement to move forward with plans to merge by June 30, 2020.
The merger of Sydney-based First State Super, with A$96 billion ($67.4 billion), and Melbourne-based VicSuper, with more than A$23 billion, would create a retirement-savings giant with roughly A$120 billion.
The funds announced exploratory merger talks in April.
In separate updates on their respective websites, both funds predicted the combination would bring members "significant benefits."
The funds will proceed to conduct a thorough review of each other's operations during the coming months.
An information guide on the funds' websites provided further organizational details following an eventual merger.
First State Super CEO Deanne Stewart would serve as CEO of the merged fund, while VicSuper CEO Michael Dundon would continue with the fund following a merger, to ensure a smooth transition.
Neil Cochrane, First State Super's independent chairman, would serve as chairman of the merged fund.
Australia's A$2.8 trillion pension industry is consolidating amid increased scrutiny of under-performing funds and growing pressure to cut fees and boost returns as new laws require boards to consider the best interests of members. A government-commissioned review earlier this year found the superannuation system, which invests the mandatory retirement savings of Australians, was beset by inefficiencies and called for more mergers.
Bloomberg contributed to this story.