An almost unprecedented number of corporate superannuation mandates are up for grabs with the likelihood that more than half of them will end up migrating to industry superannuation funds.
According to consultants specialising in handling corporate superannuation mandates, around nine reviews are currently underway for corporate superannuation funds currently being serviced by the National Australia Bank-owned Plum, AMP Limited and Westpac’s BT.
The upturn in corporate superannuation fund mandate reviews has been caused by the backlog generated by the 2020 COVID-19 lockdown which prompted corporate superannuation boards to put their plans on hold.
“The boards of these corporate funds were thinking about reviewing their providers 12 months ago but have only recently decided to activate the process,” one consultant said.
At the same time, at least some decisions to review have been prompted by National Australia Bank’s decision to sell its MLC Wealth business to IOOF, including its superannuation business, Plum.
AMP Limited has been the subject of scrutiny with respect to corporate superannuation mandates in the wake of fall-out from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and as a recently as late last month acknowledged the “exit” of a corporate super mandate as being a factor in its cash outflows.
The company valued its corporate superannuation assets under management at $28,361 million and used its full-year investor report to state that the 2020 financial year had been impacted by previously announced mandate losses in corporate super amounting to $1.8 billion and $1.8 billion of COVID-19 Early Release Super payments.
One of the superannuation industry’s most experienced consultants, Deloitte’s Russell Mason confirmed the likelihood that a significant number of the corporate funds would select industry funds to meet their needs.
“Ten or so years ago corporate superannuation boards might have ruled out a move to industry funds, but that is no longer the case,” he said.
“Where a decision is being made, industry funds are getting 50% or more of the mandates,” Mason said.
Mercer’s Brian Zanker confirmed the level of activity in the corporate superannuation space and said there was significant attention being directed towards movement generated by recent announcements and transactions.