Legislation enabling employers and their employees to seek better deals from super funds will see fees become a key factor in attracting new members, according to a leading actuary.

RGA Australia Chief Pricing Actuary Colin Yellowlees told the Actuaries Institute Financial Services Forum in Melbourne last week that group life insurance is a significant part of the fee structure in super funds, and this could have a significant impact on the industry.

“Members will become a lot more mobile and there will be a lot of movement based on insurance costs,” he said.

“There will also be a lot of pressure on cross-subsidising of fees such as different rates for males and females.”

Mr Yellowlees says industry super funds have been competitive on fees, but retail funds will be competing for this business once choice of funds legislation is enacted.

“Industry funds will discover that they can no longer compete on fees and are unable to provide the same breadth of services,” he said.

“We are already seeing one super fund (QSuper) looking at self-insurance to remain competitive.”

Mr Yellowlees says once retail super funds compete for members they will have to look at their fees, including insurance, to be attractive to potential members.

“The members will be the key winners as it will open up fee-based competition,” he said.

“The move (by super funds) to provide advice will again encourage the member to be more mobile.”