Industry superannuation funds could have problems with implementing a MySuper product, according to two industry executives.
The MySuper product is a recommendation from the Cooper review that aims to provide low-cost superannuation with simple investment
options.
Industry superannuation funds did not have the capital backing like retail firms to undertake large-scale spending that could be needed to implement MySuper, Russell Investments director of superannuation Steve Schubert said.
New entrants or existing providers would be able to overcome the barriers in implementing products if they had the capital behind them, Schubert said.
"AMP's new low-cost superannuation product was presumably developed from money raised by shareholders. Shareholder capital probably supported a team of people who designed the AMP product," he said.
"For industry superannuation funds, the shareholders are their members. These funds will have to consider how the cost will be funded when developing low-cost super products."
Paragem Partners managing director Ian Knox said unlike retail firms, industry superannuation funds did not have the widespread operating infrastructure that would be needed to support MySuper.
"Any business strategist will tell you that a business close to the operating infrastructure always wins," Knox said.
"Big private sector groups like AMP or Westpac have the operating infrastructure such as ATMs (automated teller machines). Currently this sort of infrastructure is lent to industry funds.
"Industry funds don't own this infrastructure, they borrow. The owners are the retail funds. We are ready for a fight-back in the industry."
Schubert said large capitalised companies such as AMP also had the brand name to attract consumers to their products.
The government would have to allow for a time frame while businesses prepared to implement MySuper, industry superannuation fund REST chief executive Damian Hill said.
"Mr Cooper already knows that there is no level playing field regarding the capital backing between retail and industry funds," Hill said.
