After four years of offering its MySuper option as a lifecycle product, Tasplan plans to switch back to single strategy citing higher costs among the reasons.
The $11.5 billion superannuation fund is set for a merger with the $12.6 billion MTAA Super on 1 April 2021.
As a part of this, Tasplan will close its MySuper option called OnTrack, which used a lifecycle structure. According to APRA data at June end, the OnTrack option housed just over half or $6 billion of Tasplan's total assets.
"...One of the reasons for these changes was to reduce some of the cost and complexity of super by replacing a larger set of lifecycle options with a single Balanced (MySuper) option," the fund said in a statement on its website.
"Accordingly, our initial modelling suggests that the new Balanced (MySuper) option will see a material reduction in per unit investment costs over time, which leaves even more of your returns in your account."
OnTrack launched in December 2016. It classified members into four stages: Build (those below 49 years of age, 60 bps per year in fees), Sustain (members aged 50 to 54 years, 54 bps), Control (members aged 55 to 59 years, 48 bps) and Maintain (members 60 years or older, 39 bps).
The balanced option, to which Tasplan will transfer all lifecycle accounts, will have total fees of 55bps per year. It will use a 90:10 split in growth and defensive assets.
MTAA Super uses a single strategy MySuper products. About 83% or $10 billion of the total fund assets were in its MySuper option, according to APRA institution-level data for the year ending June 2020.
Tasplan will also close its property option, citing its small size.
Lifecyle MySuper products first hit the shelves about seven years ago. They aimed to solve Australians' low engagement with their superannuation savings by automatically de-risking members' investment portfolio progressively as they aged.
They were embraced by retail superannuation funds. However, many industry funds stayed away from and largest ones like AustralianSuper, UniSuper and Hostplus have stayed away.
At September end, there were 25 lifecycle MySuper products. Of this, 14 were from retail funds, four from public sector funds, five from industry funds and two from corporate funds.
Tasplan is not the first superannuation fund to reverse from lifecycle to single strategy, with Maritime Super having made a similar move in September 2020.