The superannuation industry is going through a period of rapid consolidation.
In part, driven by competitive forces, but also by the increasing costs of doing business, such as heightened regulation and compliance.
No doubt as a person in the transport industry, you will relate to these issues, albeit in a different context.
For us at TWUSUPER, it’s imperative that we keep our operating costs down while still delivering the best outcomes for our members.
For us to continue to do this, and thrive, we need the economies of scale that comes with being a larger fund. In April, TWUSUPER and Mine Super announced the execution of a Heads of Agreement and are now in the middle of an extensive due diligence process with the prospect of creating a sustainable $20 Billion fund for mining and transport people.
If successful, it is anticipated that the merger will be finalised in early 2024.
Within the superannuation sector, we are seeing generic, ‘mega super funds’ emerging aiming to be all things for all people. We see our future as being focused on transport, logistics and mining industries in a meaningful and substantial way — building on the natural affinities between these industries.
The proposed merger makes sense as transport and mining have many connections and both are the backbone of Australia. Mining is as much about transport as it is about mining, shifting materials on loaders and trucks, to rail and then to ports and ships.
Transport is central to delivering much needed infrastructure, parts, people and provisions to mine sites. I view this proposed merger as being one that builds on these synergies for growth, making the combined fund managing triple the size of TWUSUPER’s current funds under management.
As I’ve already mentioned, TWUSUPER is currently undergoing a comprehensive due diligence process. But as we navigate through the intricate complexities, I’m buoyed by the investment performance results of both TWUSUPER and Mine Super this financial year.
It is testament to the funds’ resilience and promising prospects. TWUSUPER’s Balanced investment option achieved a notable final return of 9.14 per cent in the FY 22/23, exceeding the performance of much larger industry funds. Our High Growth Option returned 12.90* per cent for the FY 22/23. Of course, long-term returns remain the core objective, but a good year against peers is worth mentioning.
This consolidation isn’t just about the financials though. I believe there is a deep-seated cultural resonance that underlies this strategic move.
Mine Super, like TWUSUPER, is grounded in values of hard work, straight-talking communication, and enduring community ties. It’s not just a business merger, but a blending of two communities, where both identities and their underlying character continue to coexist and evolve and improve services for members and their retirement outcomes.
On a practical level, the new Board will be split 50/50 between mining and transport representatives from the current Boards, and a co-chair arrange for the first 18 months.
Our Melbourne-based office and Mine Super’s Sydney and Newcastle presence will be maintained as the two fund footprints are complementary and national.
Importantly, our dedicated transport-specific insurance offering that protects people working in transport occupations, such as drivers, loaders, mechanics and other manual workers, will continue. Mine Super share the same insurer and also protect members in sectors with dangerous occupations that have unique risks. This is an important point of difference when comparing us with a number of other super funds.
A useful byproduct of a transport/mining fund merger will be the strategic relationships between the new entity and key transport partners such as the peak body associations, including the Victorian Transport Association, Queensland Trucking Association, Tasmanian Transport Association, Western Roads Federation. and Australian Road Transport Industrial organisation NSW.
The proposed merger of TWUSUPER and Mine Super represents a significant leap towards strategic growth, while maintaining a firm focus on industry-specific needs, such as dangerous occupation insurance.
As we confront the future, it’s crucial that we foster an environment where growth and industry identity coexist harmoniously, securing a better future for members.
The balance between scale and identity will indeed define our sector’s resilience and adaptability in the years to come.
I can’t share our new proposed name just yet, but it will be something we can all get behind.
*Past performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a fund.