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MySuper flexibility makes tailored offerings unnecessary
Treasury has told superannuation funds that the insurance and fee flexibility included in MySuper makes it unnecessary to offer separate tailored MySuper offerings for large employers.
In an address at the Association of Superannuation Funds of Australia superannuation compliance summit, audience members were told that while superannuation funds were allowed to create and tailor additional MySuper products for large employers, the flexibility in the original MySuper product made it unnecessary.
Flexibility with insurance arrangements and administration fees at the workplace level may lead super funds to think they can tailor different products for large employers, but given the flexibility in the original offering, they may want to ask if that was really needed, according to principal adviser for the superannuation, financial systems division of Treasury, Jonathan Rollings.
Super funds can instead create one MySuper product and white-label it to reflect different workplaces, he said.
A large employer must have at least 500 employers, Rollings said.
"You can replace the default insurance schemes in the MySuper product with different schemes in different workplaces, and the legislation also allows for different administration fees to apply to different workplaces, to reflect any administrative efficiencies that may be accruing," he said.
Rollings also emphasised that MySuper is not a separate financial product for the purposes of the Corporations Act, and therefore there is no need for super funds to have separate accounts for members during the transition phase.
"It should be able to operate akin to a current default investment option, and can sit within a member's single account as an investment option," Rollings said.
Treasury will await any feedback about the issue, he added.
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