Cooper Super System Review

The Super System Review, being led by Jeremy Cooper, is examining Australia’s superannuation system in three phases.

This review, together with the Henry Tax Review and the Harmer Pension Review, is a significant opportunity to ensure that our retirement income system continues to operate effectively and efficiently.   Mercer welcomes the opportunity the Super System Review offers to reform the superannuation system. Such a review is long overdue.   We also support what the Review Panel is trying to achieve including many of the preliminary recommendations in its MySuper Report and almost all the recommmendations in the SuperStream Report.    Read Mercer's response to Cooper's preliminary reports.

The Phases of the Cooper Super System Review

Mercer’s second submission to the Super System Review

The second phase of the Cooper submission focuses on improving efficiencies in the system and reducing costs.

Whilst there are many ways for superannuation funds to improve administrative processes, most funds have been forced to concentrate on keeping their systems up to date with the continual changes in legislative requirements. Each change in legislation increases costs in the short-term, even if they result in longer-term savings and many legislative changes have resulted in longer-term adverse cost impacts. Often, only scarce resources remain available to make efficiency driven changes to systems.

However, there is little point having a serious conversation about reducing member fees within superannuation if the Government does not address some fundamental blocks to improving efficiency in the operations of the system.

Key recommendations in Mercer’s submission to the Cooper Review:

Improve efficiency and reduce complexity

• Mandated central clearing house for accumulation contributions
• Use of TFN as identifier - if no TFN, contributions go to ATO and not fund
• Fees should not be mandated, the market should set them, but efficiencies can be gained to help drive them down
• Prescribed information standards and protocols
• Simplification of preservation components
• Allow for easier member transfer between funds
• Remove tax on death benefits
• Allow additions to be made to account based pensions

Improve adequacy

• Introduction of whole-of-life investment default options – but not mandated
• Make financial advice tax deductible
• More widespread relief in relation to calculators

Improve competition and governance

• Default funds should be eliminated from Modern Awards – it reduces competition
• Smaller funds should not be forced to rationalise – but industry consolidation is inevitable
• Remove  requirement for equal representation on Trustee boards
• Sustainability of system could be improved by encouraging superannuation funds to prepare a financial condition report on a regular basis
• Should keep two regulators but reduce duplication of reporting
• Administrators to be licensed to allow APRA to deal directly with them

Download Mercer's complete submission to phase two of the Cooper Super System Review.

 Read Mercer’s media release.