Superannuation consolidation continues as HESTA merges with Mercy Super

Superannuation consolidation continues as HESTA merges with Mercy Super

HESTA CEO Debby Blakey (Provided).

Health and community services super fund HESTA has announced plans to merge with Brisbane-based Mercy Super, adding 13,000 members and roughly $1.7 billion to its funds under management (FUM).

HESTA CEO Debby Blakey says the merger builds on the fund's strong growth and longstanding links in the Queensland community, where Mercy Super has been operating since 1962 providing benefits for employees of Brisbane’s Mater Hospital and other Sisters of Mercy organisations.

The proposed deal sees a continuation of a consolidation trend in the sector following the merger of QSuper and Sunsuper in February, which created the $230 billion Australian Retirement Trust (ART), and the announcement of Christian Super's planned merger with Australian Ethical (ASX: AEF) in April.

“I’d like to acknowledge the excellent service Mercy Super provides its members and the strong alignment we share through our focus on delivering better retirement outcomes for members and our dedication to serving the health sector,” Blakey said.

“Mercy Super has built an incredible legacy since its creation in 1962. We’re thrilled at the prospect that their members could be part of a merged fund that shares this long-term focus and commitment over many years to delivering strong, sustainable investment performance.

“This merger is the start of a wonderful new chapter of our growth that we believe will benefit members and continue to position HESTA as the fund of choice for those wanting their super to have impact.”

With more than 930,000 members and $68 billion in assets, HESTA is by far the more significant partner and Australia’s only industry super fund solely dedicated to people in health and community services.

Founded in 1987, more than 80 per cent of HESTA’s membership is female, with the super fund investing heavily in gender equality.

HESTA advocates for women by lobbying to remove the $450 minimum super threshold, a policy it believes disproportionately affects women, especially those in lower-paid caring roles.

It also provides micro-finance projects that support low-income people across India, with up to 70 per cent of the investment supporting women and providing access to finance for housing and small businesses.

Following an analysis of all funds matching its selection criteria for scale and delivery of improved member outcomes, the Mercy Super board entered into exclusive discussions with HESTA due to its strong track record of performance, future sustainability and deep links to the health sector.

Mercy Super CEO Wendy Tancred said the merger had been strategically planned as the next logical step to ensure that their members’ super remained strong and sustainable.

“In HESTA, we have chosen a top-performing fund that shares our same commitment to the health sector and those working in it,” Tancred said.

“We’re confident our members will continue to enjoy even better retirement outcomes through a winning combination of strong performance and low fees in a like-minded fund where the cultural fit is strong.

“We’ll keep our members informed as we work through the merger and formal agreements are reached. In the meantime, it’s business as usual for our members.”

Subject to completion of a range of conditions, including due diligence by both parties and execution of a Successor Fund Transfer Deed, the funds aim to have the merger completed before the end of the year.

In other news relating to the fund, last month HESTA supported tech billionaire Mike Cannon-Brookes in his battle to thwart Australia’s biggest energy distributor AGL Energy (ASX: AGL) from splitting up its coal-heavy generation and power distribution assets.

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