A parliamentary committee looking into the proposed MySuper legislation has accepted that life insurance within a fund cannot be tailored to suit individual members.

Mercer had raised the issue at the public hearings earlier this month conducted by the Parliamentary Joint Committee on Corporations and Financial Services.

The committee’s report notes a number of submissions have called for flexibility to offer tailored insurance products in funds with a diverse workforce.

“Several witnesses made the point that in terms of a tailored large employer MySuper product, one size will not fit all,” the report says.

“Mercer raised the prospect that if trustees are required to set strategies that are appropriate for all groups of employees, it may end up with an ‘average’ strategy that is sub-optimal for all members.”

But the committee believes the current MySuper bill meets policy objectives to create a simple fund with a common set of features that are easy for members and employers to understand.

“The committee noted by having a common set of features, such as life insurance, it will make it easier for members and employers to compare products,” the report says.

“These features will encourage competition among MySuper product providers to lower fees.”

The committee also expresses some concern that details of the insurance requirements in MySuper products were due to be released at a later date and have not been included in the bill.

In a dissenting report, the Coalition has called for any specific financial advice, such as life insurance, given to members in a super fund to meet the “best interests” duty proposed in the Future of Financial Advice legislation.

It also wants the MySuper legislation to include a provision that such advice would be paid for by the member and not cross-subsidised by other fund members.

Despite some concerns, the committee has recommended the MySuper bill be passed by Parliament.