(Reuters) - TelstraSuper, the pension fund arm of telecom major Telstra, said on Wednesday it is exploring a potential merger with bigger peer Equip Super, which could create a combined fund with around A$60 billion ($40.57 billion) in management.

The two pension funds have signed a non-binding memorandum of understanding to explore a merger and set out the framework for its implementation.

"After considering a range of options, Equip Super was chosen as an ideal merger partner as their strengths complement those of TelstraSuper's," TelstraSuper said.

Equip Super, founded nearly a century ago has more than A$35 billion in funds under management and manages the superannuation arrangements for some of Australia’s largest corporations.

A merger with Equip Super also has the potential to deliver further fee reductions for members in the future, TelstraSuper said.

The funds will undertake due diligence, TelstraSuper said, adding the merger is expected to be executed via a successor fund transfer in late 2025.

A successor fund transfer is a bulk transfer of members and their benefits from one superannuation fund to another.

($1 = 1.4789 Australian dollars)

(Reporting by Ayushman Ojha; Editing by Eileen Soreng)