The Cooper review proposal that Australian superannuation funds should offer a low cost, no frills fund called MySuper has garnered support from the Association of Superannuation Funds of Australia (ASFA).
"The proposal shows that the panel recognises that there are members who don't want to make an investment choice, members who want to make a limited investment choice and members who want to make a full investment choice," ASFA chief executive Pauline Vamos told InvestorDaily.
"All sectors support the notion of different levels of investment choice ... this will allow them to start providing services of a type that the member actually wants."
However, the Investment and Financial Services Association (IFSA) was not as confident.
"Costs are already on the way down and some of our member companies are already offering retirement savings products with costs as low as 40 to 60 basis points. I don't want to see us go from 'cheap and cheerful' to 'cheap and nasty,'" IFSA chief executive John Brogden said.
"MySuper would effectively be a straitjacket, or a 'one-size-fits all' type fund where members would have no control and no investment choice. Super should not be - and cannot be - a simple 'set and forget' arrangement.
"Australians should be engaging with their super and I think the MySuper concept moves us away from where we need to be as an industry with our investors."
Product provider Suncorp Life expressed similar concerns.
"Care must be taken that MySuper doesn't become seen as 'set and forget super'. That is not the outcome that members need if we are serious about improving member engagement in Australia," Suncorp Life chief executive Geoff Summerhayes said.
However, Summerhayes remained positive about the MySuper proposal.
"MySuper must be seen as an opportunity to improve member engagement, through the simplification of both the offer itself and the communication of the offer," he said.
The confidential discussion paper circulated to industry representatives and published yesterday by The Australian outlined a proposal where super funds provide a MySuper product with no investment choice, limited flexibility and reduced fees.
The product would include active and inactive defaulters and is not intended only for the disengaged. It would include only total and permanent disability (TPD) and death insurance, from which members could opt out.
Despite supporting the proposal, Vamos was concerned about the document leak.
"It should not have been leaked. It shouldn't have been published either as it is only one part of the whole structure of member investment choice, so you can't look at it in isolation. This is only one piece of the puzzle," she said.
ASFA will now be submitting a confidential submission about the MySuper proposal to the Cooper review.
