Mercer’s Lifecycle Investment: Trends in MySuper November report found that while the pool of lifecycle funds in Australia “is in its relative infancy compared to other major pension fund markets”, 15 of the approved 82 MySuper approved products are lifecycle products.
“MySuper has provided a timely opportunity for all superannuation providers to reassess the investment strategy that is in a member’s best interest,” the report said.
“While the MySuper approvals to date suggest the established form of default will remain the preferred approach, there is clear evidence that lifecycle funds are growing in prevalence in Australia,” according to Mercer.
Of the 15 lifecycle MySuper products, seven have a “member switch” implementation approach that involves using a super fund’s existing diversified options to shifting members to a defensive strategy as they get older.
Eight funds use a cohort approach that changes the underlying strategy in the fund as a member ages.
“When looking at the lifecycle products being developed under MySuper, a clear division is emerging between the approaches taken by retail and industry super funds,” the report said.
“Member switching appears to be favoured by industry funds, with all but one industry super fund selecting this implementation approach for their lifecycle fund.
“In contrast, all retail funds so far, bar one, have chosen to offer cohort funds to their members.”
The report found that only four of the MySuper lifecycle funds in Australia have an approach that will take members “through” retirement.
