Merger on the cards for retail super funds
Centric Super is set to merge with encircle Super following the latter's trustee, Avanteos Investments, announcing the fund's closure.
In a parallel development, Colonial First State Investments is also stepping down as the operator of encircle's managed investment accounts.
Earlier this month, encircle Super members received correspondence outlining that their accounts would be transferred to Centric Super. A key driver of the closure was to "achieve scale" by providing members access to a larger combined fund.
"Increased scale and consolidation has the potential for benefits to members through an overall lower cost of services on a member-by-member basis, as a result of a larger member base," says a spokesperson for Colonial First State (CFS), the parent company of Avanteos Investments.
"This is also consistent with recent statements made by APRA as to the benefits of consolidation within the superannuation industry."
Of note, according to APRA fund-level superannuation statistics, encircle Super held 7612 member accounts and assets under management of $2.7 billion as of 30 June 2022. Meanwhile, Centric Super has just shy of 1000 accounts and $9 billion funds under administration.
Centric Super was also identified as the optimal choice for the merger because of its existing relationships with encircle clients, the CFS spokesperson added.
"When considering Centric as the receiving fund, one of the considerations was that clients of Encircle are serviced by a licensee which is currently servicing members, ensuring members would continue to be serviced by their existing adviser after the transfer."
A Centric Wealth spokesperson stated that it has been closely collaborating with CFS and fund managers to ensure a smooth integration of encircle's assets. However, a few investments will transition as sell-only assets, largely attributed to their status as legacy or closed products.
"A comprehensive project plan is in place to support the migration, being executed by highly experienced project managers and implementation teams. Data integrity and security and optimal client outcomes are the key principles underpinning the plan and approach."
A statement from Centric said following a 'transaction freeze' around August 18, encircle clients will be transferred approximately one week later.
This article first appeared on Financial Standard
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