Superannuation funds have estimated the cost of the implementation of the Stronger Super reforms at tens of millions of dollars per fund.
During a panel session organised by the Association of Superannuation Funds of Australia (ASFA) yesterday, Mercer Australia and New Zealand managing director and market leader David Anderson said the regulatory reforms would be the most expensive change program Mercer had experienced so far.
"We think that the total gross cost for us is going to be $25 million over the next five years, which is probably the largest change cost that we have had in our organisation," Anderson said.
"We ordinarily appoint a steering group and a project methodology, but the leadership team is taking this on board at the moment.
"About 75 per cent of our revenues will be affected to some degree with regard to this change. It is the most fundamental change in 20 years and we are treating it with the respect it deserves."
Suncorp Group executive general manager of customer distribution Vicki Doyle said the company took the opportunity in regard to the implementation to create further cost efficiencies and improve client services.
"I think our [cost] is at least around $15 million plus," Doyle, who is responsible for Suncorp's superannuation business, said.
"If you look at the minimum and you implement it as a compliance program, you might spend $10 million. You may as well then spend $12 million if you are going to improve the customer experience."
Industry super fund REST is looking at a similar level of costs, partly caused by outsourcing arrangements.
"When we initially did our planning we looked at it initially as to what our costs were going to be. It would certainly run into the seven digits somewhere and we will refine that as we will go on," REST chief executive Damian Hill said.
"Then, because we outsource our administration, we've got administrator costs as well. So I don't think the previous panellists are that far out of the ballpark of what we may be adding up to ultimately."
Apart from their own implementation costs, Australian Prudential Regulation Authority (APRA) supervised funds will have to pay for the implementation of a number of measures, including new technology systems for the processing of SuperStream.
This cost is estimated to be about $467 million over seven years.
Hill estimated it would cost REST up to $3 million.
"We obviously had the levy as part of the budget and that starts to add on. We are in the range of $2-3 million there," he said.
Qantas Super chief executive Jane Perry said the cost base for the corporate super fund would be comparable on a relative basis.
"From a cost perspective, my costs are in a proportionate order of those of my esteemed colleagues: being smaller in scale in each case," Perry said.
REST has 1.9 million members and $20 billion in assets under management (AUM), while Qantas Super has about 33,000 members and $6 billion in AUM.
The Financial Services Council has estimated its members, which make up about one-third of the super industry, will have to pay $250 million on top of the levy.
ASFA has criticised the government's estimate of the levy for APRA supervised funds, and association chief executive Pauline Vamos repeated that the costs would be much higher per member than the $4 Treasury had stated.
"We don't get $4 per member; nowhere near it," Vamos said.
"We will get some funds paying at least $61 per member, others are paying a lot less."
She also argued the levy should be spread out over the entire industry as the reform affected the whole sector.
"Because it is at an industry level, [the levy] needs to be across all sectors, including self-managed funds," she said.
The legislation on the financial industry levies, including the SuperStream levy, was scheduled to go through the House of Representatives yesterday.
