Australia's Top Pension Fund Explores Merger

(Bloomberg) -- Australia's top-performing pension fund is considering merging with a smaller peer as consolidation grips the nation's retirement industry.

Melbourne-based Host-Plus Pty, which manages about A$43 billion ($30 billion) of retirement savings from hospitality and tourism workers, signed an agreement with Club Super to formally begin due diligence on a merger, the funds said in an emailed statement Tuesday. It's anticipated the transaction will be approved, bringing greater benefits to members, the statement said.

It's the second merger in Australia's A$2.8 trillion pension industry to be explored within a week amid increased scrutiny of under-performing funds and growing pressure to cut fees and boost returns. 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 consolidation.

“We're keen to explore how a merger of our funds, based on shared values, our all profit to member philosophy, and focus and track record in serving the hospitality, clubs and allied sectors, would better serve our members and stakeholders both here in Queensland and nationally,” Club Super Chair Sharron Caddie said.

Queensland-based Club Super, which manages around A$560 million in retirement savings for 22,000 members working at sporting and recreational clubs, has a strong alignment with Host-Plus, according to the statement.

Host-Plus returned 10.88% per year in the three years through April 30 in its balanced investment option, making it the nation's top performing in that category. It looks forward to working with Club Super during the due diligence phase, David Elia, the fund's chief executive officer said.

To contact the reporter on this story: Matthew Burgess in Melbourne at mburgess46@bloomberg.net

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Katrina Nicholas, David Ramli

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