Australia’s superannuation industry will no doubt support many of the recommendations laid down in the Cooper review, though the industry should not underestimate a number of “sleeper” proposals, the Association of Superannuation Funds of Australia (ASFA) chief has said.
ASFA chief executive Pauline Vamos pinpointed potential sleeper recommendations, or proposals with the potential to go under the industry radar, as changes to insurance and trustee directorship disclosure.
Vamos said the recommendation around governance, particularly in regards to trustee membership on multiple fund boards, will prove difficult for some.
“If you’re on multiple fund boards then you need to argue with APRA [Australian Prudential Regulation Authority] as to why that’s in the best interest of the fund members,” she said.
“So for fund trustees, that is going to be very interesting.”
Vamos said trustees may also find proposals that force disclosure regarding their total and permanent disablement (TPD) insurance success rate testing.
“This can be good or bad, because trustees must access claims properly, and the last thing we want is to open the door to fraud,” she said.
“But then again, if you are going to be measured on how many TPD claims you pay, it could lead to claims being paid when they shouldn’t be, which is not in the best interest of fund members. So that’s going to cause a lot of debate.”
In terms of other recommendations, Vamos supported changes to MySuper and Superstreams.
“MySuper, for many funds, is the opportunity to go back to basics, so to go back to pure fiduciary investing,” she said.
The changes to MySuper has “codified” a lot of the current duties undertaken by trustees and has drawn a very clear line in the sand of minimum standard that most trustees meet, according to Vamos.
She said in terms of Superstreams, it is going to do well to help reduce costs in the medium to long term.
The Cooper review recommendations were handed to the government on 5 July.
