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With the key details of the Cooper Review known to the financial services industry for more than two months, the Minister for Financial Services, Chris Bowen, has released the final report of the review panel specifically referencing just two elements — MySuper and SuperStream.
The MySuper Cooper Review recommendations go to the provision of low-cost default arrangements while the SuperStream arrangements involve improving and modernising the back-office functions of superannuation funds, including increasing the level of electronic funds transfers and the use of tax file numbers.
The Minister said that this week’s release of the Cooper Panel’s final report had cleared the way for more detailed and extensive discussions with the industry and the broader community over the Cooper Review recommendations.
Releasing the report, Bowen said that superannuation had not taken advantage of technological advances over the last few years and remained too paper-based, with not enough electronic transactions.
The minister said the recommendations from the Cooper Panel to improve the efficiency of the superannuation system had been estimated by Treasury to save the industry in the order of $1 billion a year or around 25 per cent of current operating costs.
He said the Treasury had also estimated that the recommendation for a basic, low cost default fund, MySuper, could generate short run savings of $550 million a year, rising to $1.7 billion a year over the longer term.
“Now, for an Australian worker on average weekly earnings over a career of 37 years, this benefit would be equal to a reduction in fees of 40 per cent, or equivalent to an increase in their superannuation guarantee of an extra 1 per cent — an extra 1 per cent over and above the 12 per cent that we’ve already signalled for improved efficiency and lower costs,” Bowen said.
