First State Super and WA Super signed a memorandum of understanding and entered due diligence on March 4 this year. The funds are expected to finalise a merger by November 30.
WA Super, the smaller of the two, will get low fees, greater investment options and ongoing support for local services, First State said. However, the WA Super brand will cease to exist.
WA Super chief Fabian Ross said a key component of the negotiations for it was to maintain its local office in Perth.
"If we don't merge it will be more difficult for us to continue to offer the current level of services, and members will be required to pay higher fees at some stage. We do not believe this would be in our members' best interest in the long-term, which is why a merger with First State Super is the right step to take, with the right culturally aligned partner," Ross said.
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First State Super chief executive Deanne Stewart said the merger will benefit both funds.
"We have had a presence in Western Australia for some time, and as a result of this merger, will look to strengthen our local services and support in the state," Stewart said.
"Following the merger, we will have additional representatives of our telephone-based Member Service Centre based in WA. This means, our members in the West will be able to contact us throughout full business hours, while our members nationally will benefit from extended hours of support."
At $125 billion, First State (soon to renamed Aware Super, in September) will be the second largest superannuation fund after AustralianSuper.
WA Super, which is the default fund for local government employees in Western Australia, previously tried and abandoned a merger with Statewide Super and Tasplan which would have created $24 billion fund.
In March, Tasplan and MTAA Super, who committed to a merger late last year, moved back the date of the merger from 1 October 2020 to 31 March 2021, citing COVID-19.