Corporate superannuation funds should consider moving to a master trust agreement or outsourcing to survive the compliance and cost pressures of Stronger Super reforms, according to Mercer.
It said the introduction of Stronger Super reforms would hold corporate superannuation funds to the same standards as banking and insurance companies, essentially turning them into financial institutions.
David Anderson, Mercer's managing director for Australia and New Zealand said funds would need to significantly restructure to survive post the introduction of Stronger Super reforms in October next year.
He said superannuation funds would need to move to a master trust agreement to avoid having to become a financial institution or outsource its services.
"Mercer anticipates the polarisation of the corporate fund segment to accelerate over the next two years – with only the most committed funds continuing to evolve and compete and the rest deciding to outsource," Anderson said.
Funds would need to restructure internally and providing a MySuper account may require renegotiation of insurance contracts, and the revisal of fee structures, investment menus, forms, product disclosure statements and websites.
Anderson estimated the cost to Mercer of Stronger Super reforms will be up to $25 million over the next five years.
Mercer is developing more flexible services and governance models to meet the needs of large corporate super funds, the company said.
