The Investment and Financial Services Association (ISFA) has called for changes to superannuation funds' prudential requirements in its submission to the first phase of the Cooper review.

"The current capital and liquidity requirements of superannuation funds are inadequate. Confidence of fund members and the safety of their retirement savings are fundamental to securing and protecting the superannuation system," IFSA chief executive John Brogden said.

In its submission, IFSA called for new liquidity and pricing standards for superannuation funds.

"The minimum capital requirement for a superannuation fund was set in 1993 at $5 million. This is ludicrous for a savings pool of over $1 trillion in 2009," Brogden said.

"Funds can be severely stress tested as we have recently seen when market cycles are on a downward trend. Consequently, IFSA recommends that illiquid funds or investment options be defined as those holding 20 per cent or more in illiquid assets."

IFSA also recommended that illiquid assets should be valued at least every 12 months and illiquid funds should be required to align their redemption and valuation process to preserve equity and guard against arbitrage.

The adoption of daily unit pricing for the entire sector was also called for by IFSA.

Brogden said all IFSA members currently participated in daily unit pricing and many industry funds were also making the move away from crediting rates.

"Unit pricing ensures equity between all investors and provides them with certainty and confidence that their balance reflects the actual market price on their fund's assets," he said.