On 17 December 2021, EISS Super and Cbus Super signed a Memorandum of Understanding (MOU) to work towards completing a merger in 2022.
Based on discussions with Cbus Super and the comprehensive proposal put forward by them as part of EISS Super’s tender process, we believe partnering with them will provide EISS Super members with access to greater economies of scale and investment opportunities that will ensure members’ interests continue to be protected in the long term.
Cbus Super have a proven track record of strong investment performance and a commitment to member service that will help enhance the retirement outcomes of EISS Super members. They also have an existing connection to the energy industry with over 36,000 members working in electrical trades. This means they have insurance arrangements in place that address the risks of working in the energy industry which will benefit EISS Super members by ensuring they continue to receive cover based on the type of work they do.
Having signed an MOU, we are now in a formal due diligence period with Cbus Super and are sharing information and working together to more fully understand the benefits that a merger could deliver to our members.
Hi, I'm Lance Foster, Chief Executive Officer of EISS Super, and it is my pleasure to provide you with this update on the merger we are working on with Cbus Super.
Finding a merger partner has been part of our strategic plan for several years. We've had conversations with a range of funds during that time to ensure we selected the right partner for you, our members. Based on the discussions we have had with Cbus over the past four to five months, the comprehensive proposal they put forward as part of our tender process, and the due diligence work we are undertaking at the moment, we are confident that Cbus Super is the right partner for our members. We have seen strong evidence that partnering with them will provide EISS Super members with access to greater economies of scale, and investment opportunities that will ensure members' interests continue to be protected in the long term. They have a proven track record of strong investment performance, and a commitment to members' service that aligns with ours, and will help enhance the retirement outcomes of EISS Super members. Cbus also have an existing connection to the energy industry, and therefore have insurance arrangements in place that will benefit EISS Super members by ensuring you continue to have access to insurance cover that addresses the risks of working in the energy industry. I understand the concern that some of you have expressed about the security of your entitlements post merger, especially those in our defined benefit and retirement schemes including our lifetime pension members, and want to assure you that the primary responsibility of the EISS Super board and management team in a merger is to ensure that the merger is in the best financial interest of members, that members' benefits including defined benefits and lifetime pensions are protected and maintained, and that members have equivalent rights following the merger. We know during a merger that the future can seem unclear, so to remove some of that concern I want to provide you with an overview of the process that we followed to date, and a little information on what will occur over the coming year. First, in October and November last year we conducted a tender to identify the right partner for our members. As previously communicated, we signed a Memorandum of Understanding with Cbus in December 2021. This agreement documents the commitment by both funds to work towards a merger in 2022. Shortly thereafter, we started the due diligence process which is the stage we are currently in. So far, it is going well and is expected to continue through to the end of May. Merging two super funds is not a simple process, and there are many checks and balances in place to ensure your entitlements are protected, and that members' best interests are served. Many of these occur during the due diligence phase, including two important tests called the Best Financial Interest Test, and the Equivalency of Rights Test. Both tests must be passed and approved by the EISS Super board before signing a formal and binding agreement to merge with Cbus. The next step is to prepare the systems and processes that will support administration, investments, and insurance. This is essential work that needs to be completed by Cbus before we can transfer any member accounts or assets to them. It is this stage where a number of third parties such as both funds administrators, custodians, and insurer are involved. Based on our planning to date, the intention is to transfer EISS Super and Pension members to Cbus towards the end of 2022. EISS Retirement Scheme, Defined Benefit Scheme, and Lifetime Pension members will follow likely at the end of the first quarter of 2023. These are indicative dates and may change, but we'll know more about the specific dates for transfer by late June, and we'll keep you updated as we move through the merger. As we get closer to the transfer dates, we will provide you with information about the transfer such as what Cbus investment option your super will be moved into. We'll also let you know if there's any action you may need or want to take before the transfer occurs. We will provide another update when we have signed a merger agreement, but if you have any questions in the meantime, please call us. We are here to help and are happy to answer your questions. You can also find the latest information about the merger on our website, including a list of frequently asked questions which we will update throughout the merger process. Just visit www.eisuper.com.au/cbusmerger. Thank you for your time.
The superannuation industry has undergone immense regulatory change over the past few years and further changes are expected to occur that will make scale (the number of members in a fund and the value of assets managed by a fund) a critical factor in being able to operate in the long term in a manner that is in the best financial interests of members.
We have an obligation to our members to consider the benefits of a potential merger and to proceed with that merger if it is in the best financial interests of our members.
Initial discussions with Cbus Super have been very positive and indicate that building on our shared values and strengths could provide significant benefits to the members of both funds.
As a result, we have signed an MOU which will allow us to further explore the benefits a merger may provide to members and determine whether it is in the best financial interests of our members to proceed.
As always, the best interests of our members will be the determining factor in any decision that is made.
Signing an MOU does not change anything for you as a member. It simply means that EISS Super and Cbus Super are commencing a formal due diligence process which will explore whether a merger of the two funds is in the best financial interests of you, our members.Signing an MOU is an important step in the merger process, but we are still in the early stages. We will inform you of any important decisions that are made.
Having signed an MOU, we are now in a formal due diligence period with Cbus Super where we will share information and work together to more fully understand the benefits that a merger could deliver to our members.
This work is expected to continue through to the end of May, after which the EISS Super Board will meet to ensure that:
If approved, a formal merger agreement will be signed with Cbus and work will commence to prepare the systems and processes that need to be in place before members’ accounts and assets can be transferred to Cbus.
The merger is expected to be completed in two stages with EISS Super (accumulation) members and EISS Pension members transferring towards the end of 2022 and Retirement and Defined Benefit Scheme members, including Lifetime Pension members to transfer by the end of the first quarter of 2023.
Please note: Transfer dates are subject to merger approval and final arrangements being agreed and may change but we will keep you updated.
Based on initial discussions, a merger between EISS Super and Cbus Super has the potential to deliver access to greater scale that can deliver long term cost savings to members, while also providing solid long-term investment returns and improved financial outcomes at retirement.
The due diligence process that we have now commenced will allow us to further explore these potential benefits and determine whether a merger is in the best financial interests of our members.
Before we can determine whether the merger will proceed the due diligence process needs to be completed to ensure:
The due diligence process is currently underway and is expected to be completed by the end of May. If approved, a formal and binding merger agreement will then be signed with Cbus.
We will update you when this work is completed.
Not at the moment. For now, it is business as usual while we further explore what looks to be a good opportunity to improve outcomes for you, our members.
You can contact us in all the usual ways, and we will also inform you of any important decisions that are made as part of this process via regular updates.
At least 30 days prior to the merger all members will be sent a Significant Event Notice. This is a comprehensive document that will set out in detail any changes to your account as a result of being transferred to Cbus.
Following approval of the merger, EISS Super and Pension members’ account balances will be transferred into the Cbus investment option that best matches the existing investment preference of the individual member.
After that, if you wish to change your investments you will be able to do so by making an investment choice, just like you can today.
Cbus have a broader range of investment options than EISS Super, so members will have greater choice after being transferred.
For Retirement Scheme members, it will work the same for the part of your account that you have investment choice on.
As part of the due diligence, we are discussing with Cbus the various options available to ensure members interests are protected and that the cover they have today is equivalent or improved following the merger.
We will provide members with an update once these discussions are finalised, and an agreement has been reached.
We are working through this with Cbus and are aiming to transfer members with minimal disruption.
We will provide further updates once discussions are finalised, and an agreement has been reached.
EISS Super and Cbus Super are both profit-to-member funds and share a member first ethos.
We both have an existing connection to the energy industry and are committed to helping our members secure their financial future through great personal service, solid investment returns and low fees.
We are also firm believers in the importance of protecting your, and your family’s livelihood through quality insurance that covers members for the work they do including when they work in risky occupations.
Cbus Super was formed in 1984 as the industry super fund for people working in construction. Today Cbus has more than $65 billion in funds under management on behalf of some 775,000 members across Australia – including more than 36,000 members in the energy and electrical sectors.
Cbus members also work in engineering and design, mining and building maintenance, as well as on construction sites.
Cbus Super has a long history of strong investment returns, a focus on insurance tailored for risky occupations, as well as personalised service and low fees.
As an industry fund, Cbus Super is driven to maximise returns to members, not profits for shareholders, and prides itself on being a major investor in the Australian economy, including more than $790 million in direct energy investments plus indirect investments in electricity infrastructure (as at 30 June 2021).
No, your entitlements through the Retirement Scheme or Defined Benefit Scheme will not be affected.
The EISS Super Board must ensure the merger proposal passes the Best Financial Interest and Equivalency of Rights tests. This means we must ensure that members’ defined benefit liabilities are protected and maintained in the merger arrangement.
We are currently speaking with both New South Wales Treasury and Cbus to ensure that the guarantee of benefits provided by the New South Wales Government is maintained in the event of a merger.Should the merger proceed it is expected that Retirement and Defined Benefit Scheme members will be transferred to Cbus by the end of the first quarter of 2023.
Your defined benefit lifetime pension will not be affected.
If we proceed with the merger, the merged fund will continue to administer EISS Super’s defined benefit lifetime pensions and provide services to members.
Yes - We will advise you of any decisions that are made and will be updating these FAQs as well.
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