Merger update - December 2021

Merger update
Memorandum of Understanding (MOU) stage - December 2021

On 17 December 2021, EISS Super and Cbus Super signed a Memorandum of Understanding (MOU) to work towards completing a merger in 2022.

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.

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.

Over the coming months we will be working closely with Cbus Super to further explore the benefits of a merger and will update you when this work has been completed. If you would like further information about this merger, please visit eisuper.com.au/cbus-merger. In the meantime, it is business as usual, and we are as always, here to help you.

Signing an MOU is an important step in the merger process, but we are still in the early stages. The below diagram outlines the process that will be followed.

 

Our latest merger update
Our latest merger update
Transcript

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.

 

Merger steps

Frequently asked questions