Research house Mercer has received regulatory approval from the Australian Prudential Regulatory Authority (APRA) to offer its MySuper product.
The MySuper product will feature an investment strategy designed for the entire lifespan of members and will be available from 1 December 2013.
Leader of Mercer’s financial services business in the Pacific Ben Walsh said the Mercer SmartPath option automatically adjusts the mix of assets to match the investor's life stage and ability to take on risk.
But unlike other life cycle products available on the market, Mercer SmartPath has been developed to go through retirement rather than just to the start of retirement, he said.
“Going ‘throughout’ retirement and not just ‘to’ retirement means Mercer SmartPath supports you while you are working, as well as during your retirement years,” said Mr Walsh.
“It sounds simple, but it’s surprising how many life cycle options really only work for you until the day you retire and not during your retirement,” he added.
Mr Walsh said the strategic allocation of Mercer SmartPath involves increasing diversification and investing in lower volatility shares leading up to retirement to better manage risk.
“We also allocate a higher proportion to tax-aware Australian share strategies in retirement to improve returns and take advantage of the tax exempt status of retirees,” he added.
But at the same time, it is important for retirees to maintain some exposure to growth assets given that around two thirds of individuals' retirement income is derived from returns earned during the post-retirement phase, said Mr Walsh.
As a result, Mercer has a higher allocation to growth assets after retirement compared with other life cycle options on the market, according to Mr Walsh.
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