The cost of implementing a number of the recommendations outlined in the Cooper Review needs greater thought, a number of industry association heads have said.
“There is no doubt that Cooper’s efficiency reforms have the potential to deliver long term savings to members, however it also needs to be recognised that there will be implementation costs that could erode costs savings to members in the short term,” AIST chief executive Fiona Reynolds said.
Reynolds said the association has concerns as to how the implementation of many of the reforms will be funded given there are multiple stakeholders and processes that need to be co-ordinated.
“We would hope that the Government consider providing some funding for system upgrades as not for profit funds do not have the profits or parent companies to help in these costs,” she said.
The Association of Superannuation Funds of Australia chief executive Pauline Vamos said while the review’s recommendations were prudent and most trustees will have no difficulty complying with them, the added cost may prove a strain.
“I think that has been my only concern through the whole process. Superstream will deliver savings, there is no doubt about it, but a lot of the other requirements, which are necessary, still need implementation resources and that means costs and we have to understand that,” Vamos said.
“Because there is a lot more on accountability, changing disclosure, the level of investment in websites, electronic commerce, internal systems, the likely increase in the cost of external providers, particularly administrators, is going to add cost and despite what Cooper said, the majority of trustees really haggle a very good bargain on their investment fees, so we’re not going to see much of a reduction in that area.”
The Cooper Review recommendations were handed to Government yesterday.
In May 2009, the Government commissioned the Cooper Review to provide it with recommendations on how to make superannuation simpler, safer and more efficient.
