Part 1 - The merger with Vision Super

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Published: Thursday, 27 February 2025 09:30

 

For decades there had been pressure on Local Government Super to merge. APRA the regulator, believed it too small to provide services in a competitive environment, but the Board fought back, at least until 2013, resisting the pressure and contesting APRA’s vision of the future. The Board held strongly to the importance of retaining the fund’s NSW local government focus.

On top of the pressure to merge came significant pressure to move away from the equal-representational model (equal numbers of employee and employer representatives, and no one else) and add so-called “independents”. This was embraced by LGNSW and the other two unions, so depa was in a minority resisting this.

In May 2019 depa agreed to forfeit the position of our director, which I had held from 1997 to 2013, and two replacements. This would allow the 3:3:3 composition they wanted.

We’d had enough of being the loser in 7-1 votes, whether it was our director, or our shareholder.

The Board was clear to progress their sweeping plan that would retain three employee representatives, three employer representatives and three so-called “independents” including a so-called “independent” Chair. They defended it, saying it retained equal representation, but if it did it was equal representation between employee representatives, employer representatives, and outsiders. Not quite the same thing. Interestingly, the other two so-called “independents" resigned as the merger became imminent.

It was the beginning of the end, followed by a name change to Active Super in 2021 with a new juvenile, cartoonish website, using animated characters and where the site contained people they were invariably in a state of high excitement, regardless of whether that was an appropriate image, looking like they had all sniffed too much nitrous.

Inevitably after all that, on 7 June in 2023, Active Super and Vision Super issued a media release announcing they planned to merge. In one A4 page, it mentioned “without losing the focus of both funds on exceptional service and strong returns ... delivering sustainable, long-term returns for members” and absolutely no reference at all to any commitment to responsible investment.

At a subsequent Shareholders Meeting I was assured by the new Chair, in response to a question about not compromising our responsible investment practices, that Vision was excited to merge and to bring themselves up to the level of activity of Active. What could possibly go wrong?

Vision was an early adopter of entry level responsible investment but never to the extent, or with the success and achievement of Local Government Super.

There has been little information to members until all members of the fund on 16 January 2025 would have received a “Significant Event Notice”- a mechanism established in the Superannuation Industry (Supervision) Act 1993.  The Act prescribes four specific areas where this notice must be provided and leaves to the discretion of funds the opportunity of making their own decisions about what they believe constitutes a “Significant Event”. A discretion that was subsequently not exercised, but should have been, by Active Super - Part 2 below.

The Notice confirms “that on 1 March 2025, active Super will merge with Vision Super, creating a fund of around 165,000 members and more than $29 billion in funds under management”. There will be an almost immediate reduction in administration fees but they make it clear “Vision Super Proprietary Ltd, currently the trustee of Vision Super, will be the trustee for the merged fund”.

All Active Super Members, their benefits and all assets will transfer to Vision Super from 1 March 2025. Alarmingly in 7. Responsible Investment Changes, they say this:

“From 1 March 2025, the merged fund will adopt Vision Super’s approach to responsible investment, including the environmental, social and governance (ESG) - related exclusions from the portfolio.” None of us know what that means.

Obviously, the enthusiasm for Vision to do more and learn from the way Active did things has disappeared. I hope the Chair, at what I desperately hope to be my final meeting as a shareholder on 27 February, can explain why he will/can no longer deliver on the undertaking he had given.