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By Paulina Duran
SYDNEY, April 5 (Reuters) - First State Super and VicSuper are in merger talks to create Australia's second largest pension fund, they said on Thursday, as the industry faces regulatory pressure to improve standards and accountability.
The new superannuation, or retirement, fund, would have about A$110 billion ($78.21 billion) in assets under management servicing over 1.1 million workers, the nonprofit funds said in separate statements. AustralianSuper is the largest, managing A$140 billion.
"The opportunity to achieve greater scale through a merger like this could help us create even better member outcomes through superior services and broader investment opportunities, delivering strong, sustainable investment returns," First State Super said on its website.
An ongoing quasi-judicial inquiry into Australia's financial sector has found that some fund managers within the country's compulsory A$2.7 trillion pension system may not be putting customers' interests ahead of their own.
Australia plans to begin publishing "heat maps" of the performance of pension funds next year and pressure those with poor records to exit the industry. enhanced regulatory scrutiny is expected to trigger a wave of industry mergers.
First Super and VicSuper said the talks were exploratory and that no final decision had been made. ($1 = 1.4065 Australian dollars)