First announced in May 2009, the Federal Government has just released the report from the Super System Review (or Cooper Review as it is more commonly known).

The review has focussed on the management, efficiency and structure of the superannuation industry with the aim of making recommendations which maximise the retirement outcomes for members of all superannuation funds.

Some of the key recommendations are as follows:

• MySuper – to take account of the 80% of Australians who do not make an active selection of a superannuation fund or option, employers will be required to offer their employees a product that complies with MySuper standards.

Products that comply with these standards will be basic no frills products designed to have low fees, a single diversified investment option, no commissions, simple insurance coverage, access to basic financial advice and electronic communications to members.

MySuper funds must also allow members to convert their account into a regular income upon retirement. (Please note that defined benefit arrangements are excluded from MySuper.)

• Efficiency - to ensure that costs can be kept to a minimum there are a number of recommendations regarding the use of tax file numbers to identify superannuation contributions and transfers, as well as the use of technology to streamline administration.

• Scale – the introduction of MySuper, and changes to make it easier for superannuation funds to merge, provides scope for increased scale in terms of members and investments.  This brings the ability for funds to reduce overall costs, which benefit will ultimately flow on to the member.

• Comparability of Superannuation funds – given the complexity of superannuation, the Cooper Review has made a number of recommendations to enable members to compare returns, fees, taxes and investments.

• Governance – superannuation funds are ultimately managed by Trustee Boards of Directors. Recognising the responsibility and demands of these roles, there are a number of recommendations relating to how Trustee Boards function and how they exercise their powers.

The Federal Government is yet to respond to the Cooper Review and announce any policy changes that may occur.  It has indicated that there will be a period of consultation with a wide range of stakeholders on the Cooper Review recommendations. A response is expected within the next few months.

9 July 2010

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