The single price in MySuper products could mean that older members using lifecycle strategies could end up subsidising younger superannuation members, according to Aon Hewitt.
In its response to the Australian Prudential Regulation Authority’s discussion paper on the Prudential Standards for Superannuation, Aon Hewitt said the single price was MySuper’s “fundamental flaw”.
Aon Hewitt chief investment officer Janice Sengupta said that because lifecycle strategies tend to favour fixed income as the member nears retirement, there are lower costs associated with the member in question.
“If the fund has to charge all members the same investment management fee, then older members would be subsidising younger members in the more growth oriented strategies,” Sengupta said.
The Government should allow for different pricing within MySuper products to take into account the different costs of each investment strategy, according to Aon Hewitt.
