Simpler super comes at a short-term cost for some members
Some of the changes will benefit superannuation in the long term but for members of some funds this will come at a short-term cost.
Many of the reforms announced have come from inquiries, the most influential being the Cooper review of the superannuation system. One of the findings of that review was the current system is a mishmash of many different systems that causes inefficiencies and delays. These inefficiencies result in extra costs that directly affect the amount of superannuation on retirement.
To overcome these problems, the federal government designed a simplified administration process, called SuperStream, based on standardised processing requirements and the use of electronic commerce.
Some of the benefits to flow from SuperStream are:
■Members able to keep track of their superannuation by logging onto an online portal that lists all of their superannuation accounts.
■The ability for members to consolidate different superannuation accounts electronically.
■Standardised documentation among all super funds to make it easier for members to consolidate accounts.
■Inactive accounts of less than $1000 will be automatically consolidated into another account for a member.
The rollout is happening in stages. The process of consolidating members' accounts began in July 2011 when superannuation funds were able to use members' tax file numbers to locate accounts within each fund.
From July 1, 2013, all superannuation funds including SMSFs must comply with new data standards and use e-commerce for processing rollovers and accepting contributions. Data standards and e-commerce will be mandatory for large and medium employers from July 1, 2014, with small employers subject to the same requirements from July 1, 2015.
According to research conducted by Ernst & Young, SuperStream will deliver an estimated $1 billion a year in savings for the superannuation industry.
As the Commonwealth will be implementing SuperStream, at an estimated cost of $467 million over seven years, APRA-regulated industry and commercial super funds will be required to pay a temporary SuperStream levy. The government estimates that the levy will result in a cost of about $4 for each member's account.
IOOF advised late last year that it would recoup the APRA fee from its members each year it was levied until the 2018 financial year, starting with a flat-rate fee of $7.11 rather than being based on each member's balance.
By contrast, Australian Super said it would freeze its administration fee of $1.50 per week for members until 2014.
With such different approaches, it is now more necessary that ever for members to closely review their superannuation statements.
Frequently Asked Questions about this Article…
SuperStream is the federal government’s simplified administration process for superannuation based on standardised data standards and electronic commerce. It aims to reduce inefficiencies and processing delays by using online portals, standard documentation and e‑rollovers so funds can process contributions and rollovers more quickly and cheaply.
Members should be able to log into an online portal that lists all their super accounts, consolidate different superannuation accounts electronically, use standardised paperwork across funds, and have inactive accounts under $1,000 automatically consolidated into another account.
All superannuation funds including SMSFs were required to comply with new data standards and use e‑commerce from 1 July 2013. Large and medium employers became mandatory from 1 July 2014, and small employers from 1 July 2015.
Yes. Research by Ernst & Young cited in the article estimates SuperStream will deliver about $1 billion a year in savings for the superannuation industry by cutting administrative costs and duplication.
There may be short‑term costs. The Commonwealth estimated implementation at about $467 million over seven years and required APRA‑regulated industry and commercial funds to pay a temporary SuperStream levy, estimated at around $4 per member account. Individual funds may handle the levy differently—for example IOOF said it would recoup the fee via a flat $7.11 charge per year while AustralianSuper announced it would freeze its $1.50 per week administration fee until 2014.
SuperStream enables electronic consolidation by allowing funds to use members’ tax file numbers to locate accounts (a process that began in July 2011), plus standardised documentation and e‑commerce rollovers that make it easier and faster to move balances into a single account.
Yes. SMSFs were required to comply with the new data standards and e‑commerce processing from 1 July 2013, the same compliance date as other super funds.
Review your superannuation statements and communications from your fund, check administration and levy arrangements, consider consolidating small or inactive accounts, and compare how different funds (for example IOOF and AustralianSuper, as mentioned in the article) are handling SuperStream costs. Regularly reviewing your super helps manage short‑term costs and benefit from long‑term savings.
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