They have also agreed to house the new fund, expected to be close in size to the biggest fund, AustralianSuper, in Brisbane, a condition of State Government approval for the deal.

But it will also mean the end of QSuper’s Michael Pennisi’s role as chief executive. He will voluntarily leave in September when the merger is concluded after telling the QSuper board in 2019 that he would leave at the end of his contract.

The new merged entity will be headed by the current Sunsuper chief executive Bernard Reilly and QSuper chair Don Luke.

Sunsuper chair and former Queensland Treasurer Andrew Fraser will move into a board trustee role. Several of the current trustees have also missed out on a seat with the merged board.

Staff below the level of senior management have been told their jobs were safe for at least two years.

In a joint statement announcing the agreement, the two current chairs said it was an historic agreement that 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”.

“The combination of QSuper’s public sector heritage in Queensland and Sunsuper’s national employer base combined with commitment to partnering with external financial advisers will create a diversified and resilient organisation investing on behalf of two million members,” they said.

“Combining the two strong, successful funds will create an organisation of world-class capability that will be open to all Australians.

“Bernard (Reilly) has led large-scale efforts in bringing complex organisations together, with a deep understanding of the dynamic regulatory environment.

“Above all else, Bernard has a deep commitment to the mission of serving the best interests of members.”

Under the heads of agreement, both organisations would continue to work together to agreed the merged organisation’s structure and how operations would deliver material benefits to each fund’s membership, with details to be shared with members of each fund during the coming months.

“Each of our boards believe that signing a heads of agreement is in their members’ best interests and we are each taking the next step to realise the potential of this merger,” the two chairs said.

The board of trustees of the new entity will be Don Luke (Chair), Michael Clifford, Bruce Cowley,  Mary-Anne Curtis, Andrew Fraser, Mark Goodey,  Elizabeth Hallett, Shayne Maxwell, Sandra McCullagh, Beth Mohle, Kate Ruttiman, Michael Traill, Georgina Williams.

Treasurer and Minister for Investment Cameron Dick said the Government had ensured the interests of fund members would be protected through the merger process, should it proceed.

“The Palaszczuk Government supports this proposal because it aligns with our vision to reinforce Queensland’s position as a preferred investment destination,” the Treasurer said.

“The merger of QSuper and SunSuper would create Australia’s second-largest super fund, headquartered in Queensland with 2 million members and $200 billion in assets.”