First State Super and VicSuper, two of Australia’s leading profit-to-member super funds, have signed a merger deed to form a A$125bn (€76.8bn) entity serving 1.1 million members.

The super funds announced their intentions after conducting comprehensive due diligence on their initial merger proposal, announced in July. The union is effective from 1 July 2020.

“The comprehensive due diligence process we have completed highlighted how much we share in common with VicSuper,” said Neil Cochrane, chair of First State Super.

“We share a strong cultural alignment and have very similar values, and this has helped our people collaborate effectively and efficiently through the due diligence phase of this project.”

Cochrane’s counterpart at VicSuper, Wayne Kayler-Thomson, said the merger would enable the two funds to leverage their combined scale to deliver an even better deal for members.

Their research had demonstrated that, by achieving greater scale, the funds could reduce costs and access a broader range of investment opportunities for members, he said.

“I initially approached First State Super to discuss the idea of a merger because we wanted to find a way to access the benefits of scale to improve outcomes for VicSuper members,” said Michael Dundon, chief executive officer of VicSuper.

First State Super’s CEO Deanne Stewart added that, over time, members would benefit from more diversified investment opportunities and lower operating costs that could only be generated through scale.

VicSuper was established in 1994 and manages A$25bn of the retirement savings of workers, primarily in Victoria.

First State Super is based in NSW and covers a range of public sector workers from police to firemen, with assets totalling A$100bn.