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The country’s worst performing default superannuation fund has been forced to exit the industry, after mounting pressure from the prudential regulator over chronic underperformance.
Maritime Super will merge with Hostplus into a single fund with around $80 billion by early 2023.
Hostplus chief executive David Elia. Credit:Jesse Marlow
As part of the deal, Hostplus chief executive David Elia said the Maritime Super board would be fully dissolved although there was scope to retain separate branding and industry-specific insurance products.
“No directors will be joining,” Mr Elia told The Age and Herald. “It’s almost like the Maritime brand powered by Hostplus.”
Maritime Super has been under increasing pressure to merge after the $6 billion fund was ranked the country’s worst performing default superannuation fund by the Australian Prudential Regulation Authority in December for returning 6.98 per cent on average over the past seven years.
Mr Elia said the pressure to consolidate had been felt across the $3.4 trillion industry but added he was not in any live negotiations to takeover other underperforming funds. “It’s fair enough to say a lot of funds are going through merger discussions. Scale is incredibly important.”
This masthead first reported Hostplus’s move to take full control of Maritime Super’s investment management in April last year. Hostplus’ unique structure enabled it to assume responsibility for investing the funds without completing the arduous due diligence process.
The deal attracted criticism from consumer advocates who queried why Maritime Super’s board remained fully employed on full pay without any responsibility or oversight of the fund’s investment management. This came before the federal government tightened rules to ensure all super fund spending results in financial benefits to members.
In an internal note to Maritime Super members, obtained by this masthead, the fund said the Hostplus merger would result in a significant reduction in administration fees and increase in investment choices. The note stressed the fund would remain industry-specific.