Super Fund Mergers — What Happens to Your Super When Funds Merge

Australia’s superannuation industry has undergone significant consolidation over the past decade. Mergers between super funds have accelerated, with notable recent combinations including QSuper and Sunsuper (now Australian Retirement Trust), Equipsuper and Catholic Super (now Brighter Super), and BT Super’s merger into Mercer Super. When your super fund merges with another, a Successor Fund Transfer (SFT) moves your account to the new fund.

What Is a Successor Fund Transfer (SFT)?

A Successor Fund Transfer is the legal mechanism by which member accounts are transferred from one super fund (the “transferring fund”) to another (the “receiving fund”) during a merger, without requiring individual member consent.

This is different from an individual choosing to roll over their super from one fund to another. An SFT is a collective transfer of all (or a category of) members from one fund.

For an SFT to proceed without member consent, the receiving fund must meet comparable benefit requirements — ensuring members are not materially worse off as a result of the transfer.

APRA’s Role in Approving Super Fund Mergers

The Australian Prudential Regulation Authority (APRA) oversees superannuation fund trustees and has a central role in super fund mergers:

• APRA must be notified of the proposed merger
• The merger is assessed for prudential soundness — APRA considers whether the merged fund will be financially sound and properly managed
• APRA does not “approve” mergers in a formal sense, but its oversight means mergers that don’t meet prudential standards are unlikely to proceed
• The Australian Securities and Investments Commission (ASIC) also has a role in ensuring members receive adequate disclosure

Trustees of both funds owe a duty to act in the best financial interests of members when considering and executing a merger.

Member Protections During an SFT

The law provides several protections for members affected by an SFT:

1. Comparable Benefits Test

The trustee of the transferring fund must be satisfied that members will receive “reasonably comparable benefits” in the new fund. This means:

• Investment options must be mapped to equivalent options in the receiving fund
• Insurance cover must be maintained (within the receiving fund’s product terms)
• Fee structures must not be materially unfavourable compared to the previous fund
• Special features (e.g. defined benefit entitlements) must be preserved or replaced with equivalent value

2. Insurance Continuity

This is one of the most important protections. Members who have insurance through their super fund (life, TPD, income protection) are entitled to have that cover continue through the merger, subject to certain conditions.

• Cover generally transfers automatically without health underwriting — no need to re-qualify medically
• The level of cover should be maintained or an equivalent provided
• Pre-existing conditions that were covered before the merger should remain covered
• If the receiving fund’s insurance terms differ, trustees must ensure the new terms meet the comparable benefits test

Action: After a merger, review your insurance cover in the new fund carefully. Check that the cover type (life/TPD/IP), level, and any occupation or loading conditions are consistent with what you had. If the cover appears to have changed materially, contact the fund.

3. Investment Option Mapping

Your existing investment option will be mapped to the closest equivalent in the receiving fund. This is disclosed in advance in merger communications.

• For example, a “Balanced” option might map to the receiving fund’s “Diversified Growth” option
• If the exact option doesn’t exist in the receiving fund, the trustee selects the closest comparable
• You can change your investment option in the new fund at any time after the transfer

4. Notification Requirements

Before an SFT proceeds, the transferring fund’s trustee must notify members. This typically includes:

• Written notification of the proposed merger and timeline
• Details of the receiving fund (name, ABN, contact information)
• Description of how your account will be mapped (investment option, insurance)
• Information about your rights and any actions you can take

Notification is usually via email or letter, and may be accompanied by online resources or information sessions.

What Can Members Do Before, During, and After a Merger?

Before the Merger Completes

• Review the notification: Read the merger communications carefully to understand how your account will map across
• Consider whether to stay or move: You have the right to roll over to a different fund at any time before the transfer date. If you are unhappy with the receiving fund’s terms, you can move your super to another fund of your choice before the SFT completes
• Check your insurance: Understand what happens to your insurance in the new fund, especially if you have significant cover or have made claims recently

After the Merger

• Verify your account balance: Log into the new fund to confirm your balance has transferred correctly
• Check your investment option: Confirm you are in an option you are comfortable with (and change it if not)
• Review your insurance cover: Check the cover type, level, and terms in the new fund
• Update your beneficiary nominations: Your binding or non-binding nominations from the old fund may or may not carry across — confirm with the new fund and resubmit nominations if needed
• Update your details with your employer: Ensure your employer has the new fund’s details (USI, ABN) for future contributions

Recent Australian Super Fund Mergers

The trend toward consolidation is expected to continue. APRA has indicated it favours a smaller number of larger funds with greater scale economies, and trustees of smaller, underperforming funds face pressure to merge.

Frequently Asked Questions

I didn’t consent to the merger — can I object? You cannot formally veto an SFT — it proceeds without individual member consent if the comparable benefits requirements are met. However, you can vote with your feet: you can roll over your super to a different fund at any time, including before the merger transfer date. The notification you receive should clearly state the transfer date, giving you time to act if you prefer a different fund.

My insurance cover changed after the merger — what can I do? Contact the new fund directly and request a comparison of your previous and new cover. If cover has materially reduced, ask whether there is a mechanism to restore it or apply for additional cover. You may also be able to apply for additional cover within the fund (health underwriting may apply for increases beyond what transferred). If the fund cannot assist, consider whether your insurance needs are better met by another fund or by direct insurance outside of super.

Will I lose my contributions history or transfer balance cap information? No — your super balance, tax components (taxable and tax-free), and associated records transfer with the SFT. The ATO holds your transfer balance cap records independently. Your contribution history accessible via myGov should update once the new fund reports to the ATO.

This article provides general information about super fund mergers. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.

See also: Employer Super Obligations.