Super sector consolidation quickens The country's largest superannuation fund, the not-for-profit AustralianSuper, has quickened the pace of consolidation in Australia's $1.6 trillion retirement savings sector by agreeing to merge with a Queensland industry fund. AustralianSuper, which has 2.1 million members and $62 billion under management, announced this morning that it had reached an in-principle agreement to merge with the Queensland-based AUST (Q) Super, which services the construction, engineering, maintenance and allied industries. The deal with AUST (Q) Super, which has more than 17,000 members and $204 million in funds under management, follows mergers in recent years with the multibillion-dollar funds Westscheme and AGEST. AustralianSuper chief executive Ian Silk last week tipped a spate of mergers as funds seek to take on the wealth arms of the major banks. "It's pretty clear that the regulators and public policy is pushing in the direction of a smaller number of large funds, rather than a large number of smaller funds," Mr Silk told BusinessDay. Mr Silk said there would be a ceiling to the size of the AustralianSuper fund, but the limit related to performance rather than member numbers or assets. "If we are true to our label and true to our beliefs - that we exist only for the benefit of members - then we should continue to grow so long as that growth adds value for members," he said. AUST (Q) Super chair Bob Henricks said in a statement: "With growing competitive pressure and increasing demands on the super-fund industry, we believe our members will be best served by the scale of a larger fund such as AustralianSuper, who can also provide a strong Queensland presence." Alex Dunnin, director of research at super research group Rainmaker, said recently that corporate funds in particular were consolidating. He said that excluding self-managed funds, there were 344 funds in Australia, down from 463 four years ago. He said that the average return for big funds were the same as smaller, but "if you look at the incidence of outperformance there is definite scale effects." A smartly run small-to-medium fund will always outplay a big goofy fund. A smartly run big fund, though, is unstoppable. Figures from the Australian Prudential Regulation Authority show the country had $1.58 trillion in super accounts in the March quarter, up $180 billion in nine months on the back of sharemarket gains. The savings pool is one of the world's largest.