Corporate super consolidation to continue

The corporate superannuation outsourcing trend is set to continue over the next five years with the likelihood that there will be only around 200 by 2009, according to leading independent superannuation consultancy, the Heron Partnership.

Managing director of the Heron Partnership, Chris Butler says he estimates that as much as $10 billion will move from company superannuation funds and into master trusts or industry funds during 2004 alone.

The Heron Partnership has been a significant player in the recent spate of corporate outsourcing tenders and argues that savings can be achieved in terms of administration charges, consulting fees, APRA levies, audit costs, insurance costs and investment charges.

"Many employers are deciding there is limited value in operating their own company fund with the impending Australian Prudential Regulation Authority Trustee Board licensing which mean increased compliance, reporting and disclosure requirements being placed on Trustee boards," Butler says.

"On top of this, they can't compete with the features of outsourcing solutions unless they spend considerably more time and effort on their fund at the expense of improving shareholder value," he says.

Butler says that the Heron Partnership's experience in handling corporate superannuation outsourcing suggests that total cost savings of around 25 per cent or more can be achieved.