SYDNEY: Australian pension funds QSuper and Sunsuper said on Monday they would merge, forming the country's largest single manager of retirement savings as regulatory pressure drives consolidation in the industry.

The funds, which are both based in the northern state of Queensland, said they would manage a combined A$200 billion ($156 billion) in retirement money for two million Australians, about a sixth of the country's workforce, when they join later this year.

The mega-merger reflects the rapid consolidation of Australia's A$3 trillion pension industry after a 2018 inquiry found fees charged by some managers were unjustified and eroded workers' savings, and that many funds were not putting customers' interests ahead of their own.

The government has since made it mandatory for funds to put member interests first, triggering a wave of mergers as fund boards determine that scaling up results in a better deal for people's savings.

"The due diligence process we have undertaken demonstrates a strong business case for merging with achievable efficiencies and savings," said QSuper Chair Don Luke and Sunsuper Chair Andrew Fraser in a statement.

The merger would "pave the way for the creation of an unquestionably strong superannuation fund with the scale to deliver outstanding services, greater efficiencies and lower costs for members", they added.

The statement said Luke will become chair of the merged fund.

The merger, scheduled for September, will see the combined fund eclipse AustralianSuper, which has A$191 billion under management, according to Canstar, and has been the largest fund for several years. The next largest fund has A$126 billion.