Marsh McLennan’s Mercer Super Agrees to Absorb Lutheran Super

By Nick Hedley

Melbourne-based Mercer Super Trust, which has about A$30 billion (US$20.6 billion) under management and is part of the New York-listed Marsh McLennan group, has agreed to absorb Lutheran Super, a fund with A$680 million (US$467 million) in assets.

Tighter regulations have pushed up administrative costs and sparked a wave of consolidation in Australia’s superannuation industry as smaller funds seek greater scale.

At the fund’s annual members’ meeting on August 22, Lutheran Super chair John Grocke said the board had decided that a merger with a larger fund was in the best interests of clients. Regulators supported the move.

Mercer Super already provides administration, investment management, consulting and actuarial services to Lutheran Super, and was found to be the best fit, Grocke said.

“It’s taken longer than planned to reach this point, but we’re certain all parties are aligned,” he added. The funds will work towards a “transition date” of October 25.

Mercer Super recently announced a merger with Westpac’s BT Super, which has around A$35 billion (US$24 billion) in assets. After that transaction concludes early next year, the fund will have 880,000 members and A$65 billion (US$45 billion) under management, Tim Barber, the head of Mercer Super, said in the Lutheran Super meeting.

The members of both BT Super and Lutheran Super will gain access to a global organization with “significant scale” and access to a wider range of investment opportunities. The mergers will also help to reduce fees, Barber said.

Once both transactions are complete, Mercer Super will be a “top 10 to top 12” superfund and will have one of the most competitive fee structures in the industry thanks to its global reach, Barber said.