Former Super System Review chair Jeremy Cooper has rejected the idea that a MySuper regime will set legal requirements around maximum fee levels for the default fund.
"There is absolutely no limitation whatsoever on two important things: investment strategies or fees," Cooper said at the Morningstar Investment Conference last week.
"There have been an awful lot of furphies floating around in the market around those two issues. There is absolutely nothing preventing a MySuper fund charging whatever it likes."
He also denied the government would push for funds to include more passive investment strategies.
"Similarly, the government would be brain dead if it tried to dictate to all the managers, with their consultants, what the strategy ought to be in the MySuper fund, so there is no dictum that it needs to be a passive investment. So those are total furphies," he said.
A number of small to mid-sized industry funds use only active fund managers in their investment options, and they feared they would have to change their strategy as a result of new legislation.
Asked if the MySuper regime would allow for 100 per cent active management, Cooper, who is currently Challenger retirement income chairman, said: "Legally, there is nothing that will prevent them from doing that, but they will just show up as a fund with high fees and [as a result] low returns."
As part of the Cooper review, Deloitte was asked to produce a series of estimates of the total costs of MySuper products for various sized funds.
The estimates show the total cost - including investment and operating costs, as well as costs associated with intra-fund advice - for an actively-managed balanced portfolio that includes alternative assets would be 89 basis points for a $5 billion super fund and about 77 basis points for a $10 billion fund.
Some industry participants have taken these calculations as a guideline to what the government will look for in issuing MySuper licences.
Suggestions have been made that First State Super's balanced fund, which charges an investment fee of 37 basis points for a person with an account balance of $50,000, was the model on which MySuper was built.
Cooper did not deny that was the case.
"First State Super is probably the most comfortable with MySuper," he said.
