Questions raised about Cooper Review
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The Australian Institute of Superannuation Trustees (AIST) has warned against the "dumbing down" of existing balanced superannuation funds in light of the early recommendations of the Cooper Review.
Discussing the proposed changes in the sector, the AIST said although it welcomed the Cooper panel's recognition of superannuation as an important social policy it had reservations about whether so-called 'lifecycle' strategies should be mandatory for default funds, and called for greater clarification in this matter.
It also questioned whether the creation of a no-frills universal fund would lead to a dumbing down of existing balanced funds, and asked whether the fact that the fund offers basic insurance could lead to a worsening of Australia's under-insurance problem.
Meanwhile, the Association of Superannuation Funds of Australia (ASFA) said legislative changes are needed for superannuation funds to achieve greater scale in investment and lowers costs in administration. In its response, AFSA's chief executive Pauline Vamos called upon the panel to support legislative changes that enable the industry to become more technologically enabled, achieve greater scale through merging, and leverage into shared services such as wholesale investment vehicles.
Vamos levelled criticism at the abundance of paper-based forms "cluttering up the efficient processing of superannuation contributions" and said the convenience of Internet banking practices need to be emulated in the superannuation sector. She also stated that trustees must be able to act in the best interest of fund members by achieving the most efficient way of delivering investment returns, and called on the government to make changes to capital gains tax (CGT).
"The government provided temporary CGT relief during the GFC, primarily in regard to the rollover of capital losses. It is now time to bite the bullet, make this relief permanent and extend it to the rollover of all capital gains," she said.
Vamos added that comments made by Jeremy Cooper have sent a clear message to the superannuation industry that funds need to look at creating scale to drive down costs. This can be achieved through funds merging or by pooling investments, she said.
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