The Cooper Review of superannuation was announced in May 2009 as an initiative of the Labor Government intended to scrutinise the way superannuation works and to ‘maximise retirement incomes for Australians’. The Review was conducted in three phases – Governance, Operation and Efficiency, and Structure – and was delivered to the government, on time, on 30 June this year. Released yesterday by Financial services Minister Chris Bowen, the key recommendations include:
MySuper is a default fund for those who do not wish to compare different fund options and select the one they consider most appropriate for their individual circumstances. MySuper is designed to increase an individual’s retirement savings by up to $40,000 over the course of their working life. This is not a new fund. It will be offered as a default choice by existing funds providers, but will be, by law, exempt from commissions, thus achieving the anticipated savings. The current number of super accounts deemed “default” represents up to 80% of fund members, so this initiative is likely to affect a large majority of Australians. Defined benefit schemes are excluded from this proposal.
SuperStream is a package of administrative reforms designed to reduce ‘back office’ costs. This streamlining of the processing of super transactions will be achieved by improved technology and data handling. Estimated savings are
Consistent reporting means like with like comparisons of super products by standardised reports, called Dashboard, covering investment performance, fees, volatility and liquidity.
Another initiative is the ban on all commissions on insurance products in super.
Read all of the Cooper Review Report recommendations here
Louise Biti, StrategySteps
In particular, MySuper will accelerate the downward pressure on product fees and the move towards simplifying and better explaining the features and potential outcomes of specific products.
Nathan MacPhee, SuperRatings
MySuper should provide an effective safety net to protect uninformed or disinterested members. We are not sure, however, whether the cost savings will flow through in the short to medium term. The best solution is always for a member to educate themselves on super choice and spend at least an hour per year choosing the most appropriate fund to achieve a better retirement outcome.
Join YOURLifeChoices, it’s free
- Receive our daily enewsletter
- Enter competitions
- Comment on articles