MySuper will improve Australia's existing default superannuation system enabling it to stand as a second main stream alongside self-managed super funds in 2013, according to HLB Mann Judd.
HLB Mann Judd wealth management partner Jonathan Philpot said the improvement was due to lower costs, potentially an improved investment strategy and a more appropriate level of insurance.
"One of the options available to trustees and a major advantage of MySuper is its 'life cycle investing' approach. This means that members have different allocations between growth and defensive investments based on their age," Mr Philpot said.
"Younger members have more aggressive investment allocations and as they get older, the balance will move towards more defensive investments. This is a good outcome, given that very few people change their investment options from default," he said.
In addition to these advantages, Mr Philpot said that with its low cost, no investment choice and automated insurance cover, he expects it will be a better solution than many of the current default super products.
"All MySuper members will have death and TPD cover unless they opt out of the cover. The level of cover and cost will now largely be determined by age, sex and occupation," he said.
He added, however, that the self-managed super fund (SMSF) approach is very attractive and will continue to grow, particularly for the 30-40 age bracket.
"I think the SMSFs will also continue to have strong growth," Mr Philpot said. "People need to start paying their super at a much earlier age. So when they do start considering additional contributions, this is often the point where they are also considering whether an SMSF is appropriate for them or not."
"However, one risk with SMSFs is that there is perhaps too much choice with investment options. I am concerned with the large cash and fixed interest holdings of many SMSFs."
The continued strength of SMSFs and MySuper products will mean the superannuation system will develop into two main streams in 2013, both of which will have significant but very different benefits, Mr Philpot said.
