The superannuation industry may experience a higher level of mandate changes this year as super funds review how their underlying investments fit in with the requirements of MySuper, according to Mercer.
"Some funds will look at their default fund and ask themselves: 'Does it meet the requirements of MySuper?'" Mercer head of defined contributions consulting Russell Mason said.
"Funds might make some subtle changes to their underlying investments."
Mason said although the proposals of the Cooper review had not explicitly asked for a higher allocation to passive investment strategies, the focus on costs was likely to have the same result.
"The government has not said it needs to be passive, but some funds might look at their MERs (management expense ratios) and say 'well, that might be a little bit high', and add a few index products," he said.
Mason made the comments on the back of Mercer's release of its super trustees checklist for 2011, which urged trustees to start now with any investment transitions they needed to make to ensure their default fund fitted the requirements of MySuper.
Although the introduction of the MySuper regime was still two years away, funds would need to implement the changes gradually to ensure the best outcome, he said.
"There is nothing worse than having to do that over a short period," he said.
However, Frontier Investment Consulting managing director Fiona Trafford-Walker said many funds were still assessing the implications of MySuper.
"I am not sure whether this will lead to a higher level of mandate changes than usual as many clients are still thinking about what MySuper means for their offerings," Trafford-Walker said.
"I'd like to think that the current default options for our clients, which have delivered well for members over the long term, will remain relevant within a MySuper context.
"Clearly, if they are considered to be inappropriate, then we will likely see mandate changes at elevated levels, but I think that would be expensive and a shame."
