The coronavirus and the need for funds to be able to meet liquidity as a result of the increase in financial hardship claims from superannuation is creating uncertainty and delay on planned fund mergers. The Government on the other hand has suggested that funds lacking cash may be forced to merge.
More than 600,000 super fund members have already registered with the ATO to seek early release of some of their super. These members are suffering from severe financial hardship due to COVID-19 and loss of income and are choosing to access their superannuation early to ease the burden – even through this might not be in their best long-term interests.
Medium-sized funds MTAA Super and Tasplan announced in November last year that they were intending to merge on October 1 2020. In late March 202, they said that they now plan to delay their merger by 6 months. This is due to the sustained market volatility as a result of Coronavirus and concerns about the supply of specialist services like outsourced project teams. Despite the new timeline, they emphasised that the decision behind the merger and the benefits to members of both funds remain unchanged.
With the increase in staff utilising work from home due to the virus, MTAA Super CEO Leeanne Turner has said: “We think extending the merger timeline will ease stress and help our staff better manage workloads and their personal arrangements.”
Tasplan CEO Wayne Davy has said “By extending our merger timeline, we can focus on getting members the service, advice, and support they need right now. That’s always been a priority for us, but now it’s more important than ever.”
The issues mentioned by these funds are also faced by other funds, and there may well be other funds planning to merge that will also have to delay until the pandemic is over.
On the flip side of Tasplan and MTAA’s choice to delay their merger, treasurer Josh Frydenberg wants APRA to consider forcing mergers of industry super funds that are suffering liquidity problems due to the emergency COVID-19 withdrawals by members.
Frydenberg has said “The government expects APRA to exercise those powers in circumstances where it is in the best interest of fund members to do so.”
While Frydenberg’s wishes are at the discretion of APRA, and nothing is set in stone. It is an interesting insight into what’s to come in the future of fund mergers in the time of Coronavirus.
A lot is going to depend on how many people receive benefits under the JobKeeper scheme – those who do might not be under as much hardship – and then don’t need to access their super. It’s interesting though that this new way of accessing super is available a few weeks before Jobkeeper starts.
If you have any questions about the impact of coronavirus on fund mergers or need any assistance, please contact IQ Group at: firstname.lastname@example.org.