Compliance critical for super in 2011: Mercer

Superannuation funds are being urged to make sure they are ready to provide financial advice to members in a sustainable way over the coming year.

This is just one recommendation among a checklist published by Mercer for trustees and fund providers to ensure they are ready for the regulatory changes that will come from the Federal Government’s Super System (Cooper) Review.

“Over the next few years a number of legislative changes will come into effect … and superannuation funds must start preparing now to ensure a smooth transition,” said Russell Mason (pictured), Mercer’s head of defined contribution consulting in Australia.

Funds are being encouraged to determine which model — whether in-house or outsourced — is the best model to provide members with financial advice.

Mercer stated that trustees should consider the pros and cons of each, and determine the liability of the options to ensure there is an avenue for members to obtain financial advice — particularly on superannuation issues — through the fund.

Among the other areas of compliance trustees and funds should consider are making sure administrators will meet Super Stream requirements, ensuring default investment options meet MySuper requirements, and keeping up an adequate operational risk reserve.

Funds are also being urged to finalise their short-form Product Disclosure Statement by 1 July, 2011 and ensure that total and permanent disability products meet new tax deductibility requirements for trustees.

Greater communication and interaction with members is also listed as being of increasing importance as changes come about.