The size and scale requirements for supporting a MySuper product could cause superannuation funds to consider unnecessary mergers in order to remain in the game.
This comes as fund trustees are being urged to consider whether they have sufficient scale to support a MySuper fund, a requirement many believe will come down to sheer size and assets under management.
Russell Actuarial senior consultant Tony Miller said he believed funds could not be judged on size alone, and that factors like potential growth, membership numbers, consistent out-performance, fee ratios and operating reserves all needed to be taken into account.
“If you just look at size alone, a lot of funds would have to start considering mergers.
“A fund that would otherwise be quite capable of serving its membership could get pushed or encouraged or cajoled by others into merging when in actual fact they were a good solid fund in their own right,” Miller said.
Other unintended consequences of creating an arbitrary size-based requirement for MySuper funds would be creating a barrier to entry for new funds, according to Miller.
“While we agree trustees should ensure they have the scale benefits to support a MySuper option, focusing purely on current size may cause the industry to lose some of its better performers, to the detriment of members,” he said.
