Quality over quantity: CareSuper on mergers

The dust has barely settled on the merger that created CareSuper as it is today and chief executive Jason Murray is gearing up for another in mere months - but he's not looking to make a habit of it.

On November 1, CareSuper and Spirit Super finalised their merger, creating what is now a $56 billion fund with more than 580,000 members, and taking on the heritage CareSuper brand. A few short weeks later, the merged entity announced it was in discussion with another industry fund to enter the fold - the Meat Industry Employees Superannuation Fund (MIESF).

At just $1.1 billion and as a closed fund catering to a shrinking industry, MIESF has recently struggled with declining member accounts and cash flows, made worse by the COVID-19 pandemic. In March, CareSuper and MIESF confirmed the merger would go ahead, citing their shared member-first heritage and the value members place on strong retirement outcomes, service, and personalised care.

While he's looking forward to welcoming MIESF's members in "just a few months", Murray says "there's a bit of sadness, frankly."

"They look after a particular set of members and they do a great job, and we want to respect that and do an equally great job for them when they come across to us," he told Financial Standard.

"They are one of the old traditional funds, but the world is unfortunately moving very rapidly in this space, and the pressures of progress, regulation, growth, moving into advice, retirement... it's certainly challenging for those smaller funds."

Established in 1981, with less than 17,000 members MIESF has long focused on its close connection with its membership - something CareSuper is confident it can continue.

"What we've been proud of is the service we offer our members, and in the conversations that we had with MIESF on the journey that was what we really focused on," Murray recalled.

"I think that's what has brought us together as two funds that have a very strong values alignment."

But while it may be the second merger in less than a year that he'll oversee, Murray isn't expecting too many more, at least not any time soon. With positive organic growth, CareSuper is not actively pursuing any further successor fund transfers, he said.

"The industry is moving fast. Who knows what it will look like in three or four years' time? I know there's lots of speculation about what further consolidation may happen, but you've got to find the right partners. Merging for the sake of it is just not in our playbook," Murray said.

"We've done quite a few mergers and have quite a proud record of how we've been able to deliver them and with the outcomes for our members."

Of course, predecessor Spirit Super was the result of a merger between MTAA Super and Tasplan in 2021 - but its experience with mergers goes back much further. In 2003 Tasplan merged with Bus and Coach Superannuation Scheme, and in 2014 with Quadrant. Then, in 2015, it merged with RBF Tasmanian Accumulation Scheme, followed by the Fairbrother Employee Retirement Fund in 2018.

Meantime, CareSuper had previously merged with Asset Super in 2012, and gobbled up Perpetual's MySuper offering in 2020.

However, Murray said to actively chase down other funds in pursuit of size "would be a confusion of our past and of how we've done it and why we've done it."

"We will always do what is best for our members... if there is an opportunity that comes to us that fits that requirement then we would obviously have to take that very seriously," he said.

"It very much comes back to the quality of who you merge with, why you're doing it, and it must meet that Members' Best Financial Interests test, and that's becoming more challenging as the industry narrows."