THE LEADING INDEPENDENT JOURNAL FOR THE SUPERANNUATION AND INSTITUTIONAL FUNDS MANAGEMENT INDUSTRY E mployers need to be forced to not only pay their superannuation guarantee contributions on time but by way of electronic funds transfer, according to a round-table of senior industry executives conducted during the Conference of Major Superannuation Funds. The round-table not only en- dorsed a suggestion by the chair- man of the Cooper Review, Je- remy Cooper, that employers face monetary penalties for per- sistent errors relating to the pay- ment of the superannuation guarantee but also urged pay- ment of the superannuation guarantee be made to match the wage cycle. Among those backing greater compulsion on employers was the chair of the Superannuation Complaints Tribunal (SCT), Jocelyn Furlan, who said her body received hundreds of com- plaints a year regarding the non- payment of the superannuation guarantee, which were passed on to the Australian Taxation Office because they were out- side the jurisdiction of the SCT. “You have to have some form of compulsion and some form of penalty because why else would [small businesses] get on board?” she asked. Furlan added that she liked “the idea of tying the payroll cycle into the superannuation contribution cycle”. Mercer principal Russell Mason said he believed the use of electronic transfers with re- spect to the payment of the su- perannuation guarantee need- ed to be forced on employers, and that being a small employ- er did not represent an excuse given their familiarity with elec- tronic banking and BPay. “I don’t believe just because they’re a small employer they can’t do it,” he said. Australian Institute of Superannuation Trustees research officer Andrew Barr said he believed the failure of many small employers to com- ply with their superannuation guarantee obligations was attributable to a mindset. “What’s stopping them today? …There’s a mindset that this is an impost. ‘I don’t have to pay it until the end of our quarter so I’m going to hang off as long as I can’,” he said. AIST chief executive Fiona Reynolds said some small em- ployers still used cheques be- cause of the relative simplicity of administration. “You have a system in place where you’ve got cheques; two people sign the cheques, you can see the invoice, you can see the documentation – all of that; it gives you some comfort,” Reynolds said. “Yes you can go and have some complicated sort of sys- tem where two people have to stand there and ‘put in the pin codes’ and what not, but it can often be difficult to have your two signatories in the same place. “We’ve taken a long time to actually move more online in our own business [for] pay- ing our bills for security rea- sons and fraud and all of those sorts of things, and I still have a level of discomfort about it,” Reynolds said. SR ■ For more from the Super Review round-table turn to page 12. Size and administrative inexperience do not represent appropriate excuses for employers not adopting electronic funds transfer for the timely payment of their superannuation guarantee obligations. Push for employer penalties Print Post Approved PP255003/01111 COMPANY INDEX 2 NEWS 3 EDITORIAL 10 FINANCIAL PLANNING 16 COMPLIANCE 20 APPOINTMENTS 23 EVENTS 23 APRIL 2010 Volume 24 - Issue 3 12 ROUND-TABLE Mixed expectations for industry reviews For the latest news, visit superreview.com.au 16 FINANCIAL PLANNING The best laid plans of intra-fund concessions 20 COMPLIANCE On the right track but still a long way to go 9 CMSF ROUND-UP Cooper finally prompts positive industry sentiment There’s a mindset that this is an impost. ‘I don’t have to pay it until the end of our quarter so I’m going to hang off as long as I can’. Fiona Reynolds
Transcript
T H E L E A D I N G I N D E P E N D E N T J O U R N A L F O R T H E S U P E R A N N U A T I O N A N D I N S T I T U T I O N A L F U N D S M A N A G E M E N T I N D U S T R Y
Employers need to beforced to not only paytheir superannuation
guarantee contributions ontime but by way of electronicfunds transfer, according to around-table of senior industryexecutives conducted duringthe Conference of Major Superannuation Funds.
The round-table not only en-dorsed a suggestion by the chair-man of the Cooper Review, Je-remy Cooper, that employersface monetary penalties for per-sistent errors relating to the pay-ment of the superannuationguarantee but also urged pay-ment of the superannuationguarantee be made to match thewage cycle.
Among those backing greatercompulsion on employers wasthe chair of the SuperannuationComplaints Tribunal (SCT),Jocelyn Furlan, who said herbody received hundreds of com-plaints a year regarding the non-payment of the superannuationguarantee, which were passedon to the Australian TaxationOffice because they were out-side the jurisdiction of the SCT.
“You have to have some formof compulsion and some form ofpenalty because why else would[small businesses] get on
board?” she asked. Furlanadded that she liked “theidea of tying the payroll cycleinto the superannuation contribution cycle”.
Mercer principal RussellMason said he believed the useof electronic transfers with re-spect to the payment of the su-perannuation guarantee need-ed to be forced on employers,and that being a small employ-er did not represent an excusegiven their familiarity with elec-tronic banking and BPay.
“I don’t believe just becausethey’re a small employer theycan’t do it,” he said.
Australian Institute of Superannuation Trusteesresearch officer Andrew Barrsaid he believed the failure ofmany small employers to com-ply with their superannuationguarantee obligations was attributable to a mindset.
“What’s stopping them today?…There’s a mindset that this isan impost. ‘I don’t have to pay ituntil the end of our quarter soI’m going to hang off as long asI can’,” he said.
AIST chief executive FionaReynolds said some small em-ployers still used cheques be-cause of the relative simplicityof administration.
“You have a system in placewhere you’ve got cheques; twopeople sign the cheques, youcan see the invoice, you can seethe documentation – all of that;it gives you some comfort,”Reynolds said.
“Yes you can go and havesome complicated sort of sys-tem where two people haveto stand there and ‘put in thepin codes’ and what not, butit can often be difficult tohave your two signatories inthe same place.
“We’ve taken a long time toactually move more online inour own business [for] pay-ing our bills for security rea-sons and fraud and all of thosesorts of things, and I still havea level of discomfort about it,”Reynolds said. SR
■ For more from the SuperReview round-table turn topage 12.
Size and administrative inexperience
do not represent appropriate excuses
for employers not adopting electronic
funds transfer for the timely payment
of their superannuation guarantee
obligations.
Push for employer penalties
Prin
t Pos
t App
rove
d PP
2550
03/0
1111
COMPANY INDEX 2 NEWS 3 EDITORIAL 10 FINANCIAL PLANNING 16 COMPLIANCE 20 APPOINTMENTS 23 EVENTS 23
APRIL 2010 Volume 24 - Issue 3
12 ROUND-TABLEMixed expectations for industry reviews
For the latest news, visit superreview.com.au
16 FINANCIAL PLANNINGThe best laid plans of intra-fund concessions
20 COMPLIANCEOn the right track but still a long way to go
9 CMSF ROUND-UPCooper finally prompts positive industry sentiment
There’s a mindsetthat this is an
impost. ‘I don’t haveto pay it until the endof our quarter so I’mgoing to hang off as
long as I can’.
Fiona Reynolds
SRAPR_10_A.PG001.pdf Page 1 31/3/10, 4:11 PM
2 PAGE TWO www.superreview.com.au
SUPERREVIEW * APRIL 2010
COMPANY INDEXAssociation of Superannuation Funds of Australia....................................................................8Australian Administration Services ....................................................................................6, 8Australian Competition and Consumer Commission..................................................................8Australian Institute of Superannuation Trustees ..................................................................8, 9Australian Prudential Regulation Authority ............................................................................8Australian Taxation Office..................................................................................................6, 9Australian Workers Union ......................................................................................................9Clearing House Working Groups ............................................................................................6Computershare ....................................................................................................................8Conference of Major Superannuation Funds ............................................................................9Coredata ............................................................................................................................8
ESI Super ............................................................................................................................6GESB ..................................................................................................................................3Industry Super Network ........................................................................................................8Investment and Financial Services Association ....................................................................8, 9Link Market Services ............................................................................................................4MAC....................................................................................................................................4Matrix Planning Solutions ....................................................................................................4Medicare ............................................................................................................................6Mercer ............................................................................................................................4, 8Moneyclip............................................................................................................................4Multiport ............................................................................................................................6
NAB ....................................................................................................................................6Omega Global ......................................................................................................................4Pillar Administration ........................................................................................................3, 6RBC Dexia............................................................................................................................4Registries Limited ................................................................................................................8Snowball Group ....................................................................................................................4Superpartners......................................................................................................................6SuperRatings ......................................................................................................................4Sunsuper ............................................................................................................................4Toowards ............................................................................................................................4UBank ................................................................................................................................6
SRAPR_10.PG002.pdf Page 2 31/3/10, 2:50 PM
Pillar makesdecimalpointMAJOR administratorPillar Administrationhas selected technolo-gy service provider dec-imal to supply a single-issue advice softwaresolution.
The selection of dec-imal to provide the so-lution has been con-firmed by Pillar’s chiefexecutive, Peter Beck,who said Pillar’s single-issue advice require-ments demanded a soft-ware solution that wasflexible enough to meetthe needs of multipleclients.
He said the solution,when implemented,would allow Pillar tosupport the adviceneeds of its clients andtheir members throughan end-to-end web tech-nology application. SR
Commissions mask true cost of adviceAUSTRALIAN consumershave a skewed perspec-tive of how much it coststo provide financial ad-vice because commis-sions have hidden thetrue cost of advice for solong, according to new re-search from GESB.
Almost half of Aus-tralians thought lessthan $500 per year was appropriate for afive-year financial plan,the research revealed.About one in five tho-ught between $501 and$1,500 was appropriate,while just 1 per centthought $3,001 to$4,000 was fair.
“Our research demon-strates a significant dis-connect between the re-alistic cost of providingcomprehensive finan-cial advice and whatconsumers expect to
pay for it,” said the gen-eral manager of wealthmanagement at GESB,Fabian Ross.
Consumers were con-fused about how to treatthe advice they re-ceived, with only 40 percent saying they would
follow a financial planprecisely. A third wouldfollow only parts of aplan and one in 10would not expect to getany use from a profes-sionally prepared finan-cial plan.
“In the absence of
education giving sightof both the true costand value of financialadvice consumers areless likely to take upadvice, thinking it isboth expensive and ir-relevant,” Ross said.
“This will leave their
efforts to save throughsuper subject to a rangeof risks, including mar-ket fluctuations, infla-tion and longevity at atime when they are striv-ing to reach more ade-quate levels of retirementsavings,” he said. SR
www.superreview.com.au NEWS 3
APRIL 2010 * SUPERREVIEW
Ready,willingand stable.
To help you manage your business in this unusually volatile time, you want a partner who is unusually
prepared to help you deal with it. Here are some of the reasons we’re the best choice:
• Awarded Best Custody Specialist in Asia by The Asset two years running.
• Named Best Client Servicing in Asia Pacific by Asia Asset Management two years running.
• Top Rated in Asia in Global Custodian Survey
• Ranked No.1 in Asia in Global Investor’s Global Custody Survey
• Ranked 10th largest asset manager worldwide in institutional assets by Pensions & Investments.
• 20 consecutive years of growth in common equity.
• Top-tier credit quality, outstanding capital strength and strong, liquid balance sheet.
To learn more about our award-winning solutions, call +65 6437 6521or visitnortherntrust.com/ready.
MEMBERS of the superannuation in-dustry have voiced concerns about sug-gestions that better default super fundsshould be built in response to a lack ofmember engagement.
The chief investment officer of Mer-cer, Russell Clarke, recently suggest-ed default super funds that rolled mem-bers through progressively defensiveinvestment options as they aged could bea solution to the lack of engagement bysuper members.
Jeremy Kruse, a senior wealth strate-gist at Melbourne planning practiceMoneyclip, said that while he didn’t dis-pute the idea, he was concerned that byshifting superannuation holders in de-fault funds into increasingly conserva-tive investment positions as they aged,
the purchasing power of their superwould diminish over time.
There was a real risk that too conser-vative a position would not keep up withinflation and not provide them with an in-come over a 30 to 40-year period, he said.
There was no one-size-fits-all portfoliofor members, but an exposure of at least40 per cent to 50 per cent to growth assetsat retirement was a good outcome, he said.
There also needed to be sufficient liq-uid assets to keep delivering an incomestream, Kruse said.
The managing director of Matrix Plan-ning Solutions, Rick Di Cristoforo, toldSuper Review that the public neededto consider the entire financial advicespectrum rather than engaging only withsuper, thus creating better default super
funds to fix a lack of engagement wouldnot help address a lack of interest in theirfinancial future as a whole.
“Just getting superannuation sortedout is too small in scope and too nar-row ... engagement should be about theirfinancial future, and that’s a much big-ger, more important issue,” he said.
The managing director of SnowballGroup, Tony McDonald, said that whilehe agreed with enhancing default fundsto get better outcomes for members,for example by instituting “opt-out de-fault fund options”, there was a risk thatmembers would be conscripted into col-lective solutions without having memberinformation readily available.
Super funds should give members thechoice of opting out, but only if that
did not become the “lazy way” of deal-ing with consumers, or lead to peoplegiving up on engaging with members,McDonald said. SR
Super funds urged to litigateAUSTRALIAN superannuation funds could be costingthemselves many millions of dollars by not participat-ing in US securities class actions, according to London-based class action specialist company GOAL Group.
The group claimed that a recent study revealed thatbetween 2007 and 2009 some $3.5 billion was “left on thetable” with respect to the class actions and that $1.8 bil-lion of this amount was attributable to Australian cor-porate and industry funds and $1.7 billion to Australianpublic sector funds.
The report claimed that over $110 billion had beenlost by Australian superannuation funds on their in-vestments in the period and that this should act as awake-up call to those currently foregoing their rightto claim damages through the US.
The London-based group claimed there existed asubstantial opportunity for superannuation fundsto continue to reduce the pensions gap through classactions. SR
SUPERANNUATION research and ratings house Su-perRatings has announced that its web-develop-ment subsidiary, Toowards, will be commercial-ising a within-super advice solution, with the firstclient scheduled to go live in the next two months.
Under the heading ‘A new world in mass superan-nuation advice’, SuperRatings said that the launchof the new product had been under developmentfor more than 18 months and represented a web-basedsystem offering limited advice consistent with ASICRegulatory Guide 200.
It said that the product, named SuperAdviser, al-ready had commitments from two major Australiansuperannuation funds, with memberships exceed-ing one million.
Commenting on the new product, Toowards di-rector Graeme D’Costa said that with the majorityof superannuation members in Australia looking forsingle issue advice, as opposed to full financial plan-ning, the company had developed a system that couldbe used by anyone, whether it was a member, a callcentre operator or a financial planner. SR
SUNSUPER has announced thecreation of a new member andemployer services division in amajor boost to its financial ad-vice offering.
Steven Travis, who previouslyheaded up MAC and helped de-velop the On Track program, hasalso been appointed as generalmanager, member and employeeservice delivery.
The new division will featurean integrated advice and servicecentre and a super advice teamwho will manage limited per-sonal advice enquiries and re-ferrals to financial planners.
The new structure will also in-corporate the financial plannersin the On Track team as well asa face-to-face advice service formembers.
“The beauty of this new modelis that it will enable us to bet-ter tailor our services to meet in-dividual members’ needs, frombasic, largely transactional ad-vice about their accounts overthe phone to full financial plans– all within the one department,”said Sunsuper chief executiveTony Lally.
“The new structure was bornout of findings from research that
showed members had distinct ad-vice needs at different stages oftheir lives which could not be ac-commodated by a one-size-fits-all advice model,” he added.
There were also plans to ex-pand the size of the financialplanning team to accommodateincreasing demand, he said. SR
Concern on default funds4 NEWS www.superreview.com.au
Rick Di Cristoforo
RBC Dexia has won thecustody administrationand registry services man-date covering the newly-launched Omega GlobalGovernment Bond Fundand the Omega GlobalCorporate Bond Fund.
The mandate was an-nounced by Omega Glob-al Investors managing di-rector George Vassos, who
said RBC Dexia had comeout on top because of itsfocus on investment man-agers and its scope of serv-ices, which allowed thenew funds to be launchedsuccessfully in a shorttimeframe.
Omega Global Investorsis a specialist fixed inter-est manager focused on theinstitutional market. SR
Tony Lally
Mandate win for RBC Dexia
Sunsuper expands adviceservice and appoints new GM
SuperRatings subsidiary offers advice solution
SRAPR_10.PG004.pdf Page 4 31/3/10, 2:55 PM
Group Risk. Insurance without the risk.
Important Information: CommInsure is a registered business name of The Colonial Mutual Life Assurance Society Limited ABN 12 004 021 809 AFSL 235035 (CMLA). Group Risk Insurance is offered by CMLA, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Consider whether Group Risk is appropriate by considering the Product Disclosure Statement available from CommInsure. CBAI0308
Choosing CommInsure to manage your group insurance cover means you’ll be supported by one of the largest, most experienced Risk Specialist teams around. After all, we’ve been here for over 135 years. Add the fact of $1 billion of in-force life insurance premiums across Wholesale and Retail (the first Australian company to reach this milestone), capital strength with net assets more than 1.5 times the APRA solvency requirements and you have to ask yourself: why risk anything less?
To find out more, or to meet our dedicated business development team, contact us today.Call Cathy Loncar on 02 9378 3363.
AD_SRCOMAPR_10.pdf Page 1 24/3/10, 10:27 AM
SUPERREVIEW * APRIL 2010
THREE of Australia’s majorsuperannuation fund ad-ministrators – AustralianAdministration Services(AAS), Pillar Administra-tion and Superpartners –have jointly developed a setof principles and protocolsthat they claim will maketransfers between superfunds quicker, easier andmore economical.
In a joint announcement,the three administrators saidthey had agreed upon the rulescovering data and money flowfor rollovers – something thathad evolved from questionsraised by the Cooper Reviewinto superannuation.
Commenting on the agree-ment, the chief executives ofthe three organisations agreedthat it was consistent with the
direction being taken byMedicare in establishing a con-tribution clearing facility forsmall employers.
Superpartners chief ex-ecutive Greg Camm said theCooper Review had chal-lenged the industry to im-prove the efficiency of thesystem, the three adminis-trators believed the joint ini-tiative effectively rises to
the challenge.For his part, Pillar chief ex-
ecutive Peter Beck said theGovernment’s decision to ap-point Medicare to operate aclearing house had provideda unique opportunity for the in-dustry, in that it had facilitat-ed an agreement about the pro-tocols for the efficient andsecure transfer of data andmoney. SR
A UBANK survey of customers with self-managed super funds (SMSFs) has re-vealed that a third have more than 50 percent of their SMSF in cash.
UBank, NAB’s direct bank, found thatmore than half the respondents stated theyhave no plans to alter their current cashallocation despite improving economicconditions in Australia.
The survey revealed that a significant pro-portion of respondents blamed the poor per-formance and high fees of managed fundsfor their move to a SMSF, and 75 per centsaid having control of their own financialdestiny was the reason for their move.
“The results of this survey show thatmore and more people want to take tightcontrol of their own financial destinyat a time of ongoing caution about the
economic climate,” said UBank generalmanager Gerd Schenkel. “That caution isalso reflected in the fact that people arereluctant to reduce the cash componentin their SMSF – despite economic datasuggesting Australia has weathered thestorm relatively well.”
The survey also found that 31 per centwere optimistic about the performance oftheir SMSF in 2010, although 26 per centstated they still felt cautious about theyear ahead.
Some 95 per cent were not consideringclosing their SMSF to return to managedfunds; 59 per cent liked the flexibility thatan SMSF provided; and nearly half claimthe media influenced their decisions aboutthe allocation of their investments be-tween cash and equities. SR
Potential changes to super gearingTHERE could be changes in the2010 Federal Budget to the waygearing in super operates, althoughthere has been no official indicationfrom the Government, accordingto a report on self-managed superfunds (SMSFs).
More SMSF trustees are examiningthe gearing in super rules and im-plementing the strategy to obtainhigher levels of exposure to directproperty, according to the report.
The minutes of an Australian Tax-ation Office (ATO) meeting last yearstated that the ATO was working withTreasury in relation to a possible an-nouncement of a law change, ac-cording to Multiport, while the factthat the Cooper Review asked forviews on the current gearing ruleswas another indicator that suchchanges could be on the way.
Another possible change wouldbe requiring a lender to be at armslength from a SMSF, which meantthere would be no question of theviability or commerciality of the loanand the asset being acquired, Mul-tiport said.
Most major financial institutionshave lending products aimed at SMSFborrowings, primarily for property ac-quisition, the report stated. To pro-vide additional protection, they some-times seek personal guarantees fromthe individuals to circumvent thestatutory limited recourse of the anysuper loan.
This ensures that while the SMSFhas not placed a charge from thelender on any assets beyond thatwhich have been acquired with theloan, any potential short fall is cov-ered by the personal guarantee. SR
THE Federal Government hasbeen accused of failing to live upto an election promise by ne-glecting to tender the provisionof a superannuation clearinghouse to the private sector.
The accusation has come fromthe Federal Opposition, whichhas threatened to use its num-bers in the Senate to delay pas-sage of the legislation underpin-ning the clearing housearrangement, which has beenhanded to Medicare Australia.
However, in a joint statement,the Minister for Financial Services,
Superannuation and CorporateLaw, Chris Bowen, and the Min-ister for Competition Policy,Craig Emmerson, recommittedto having the clearing house op-erational on July 1 and said theOpposition needed to move outof the way.
“The Coalition needs to moveout of the way of a Governmentthat is simply seeking to imple-ment its election commitment ofa small business superannuationclearing house,” Bowen said.
He said that pending the pas-sage of the legislation, the clearing
house service would be availableto small businesses (less than 20employees) from July 2010 andthat businesses would be able toregister with Medicare Australiafrom May 2010.
The minister said Medicare Aus-tralia had been actively engag-ing with both the small businessand superannuation sectorsthrough its Superannuation Clear-ing House Working Groups. SR
Key super administrators set standard
6 NEWS www.superreview.com.au
Greg Camm
Funds need to engage membersAUSTRALIANS increasing-ly want to know more abouttheir super and funds needto do more to engage them orrisk losing members, ac-cording to the chairman ofQueensland-based ESISuper, Bob Hendricks.
Hendricks said a recentsurvey conducted by ESISuper had revealed membersregarded their fund as their‘partner’ before, during andafter retirement and expect-ed their fund to proactively in-form them of changes to leg-islation, investment optionsand market conditions thatwould impact them.
He said that with the Coop-er Review expected to makewidespread reforms, super-annuation funds would needto work harder to retain theirmembers.
“It is very easy for funds tosay their members don’t real-ly care and therefore the fundsdon’t need to invest time andresources to engage withthem,” Hendricks said. “How-ever, from our experience, thisis not true.”
He said members were morefinancially literate than everbefore, wanted to be engagedand were demanding morefrom their funds. SR
Customers still find comfort in cash, says UBank survey
Clearing house legislationhits blockage
Chris Bowen
SRAPR_10.PG006.pdf Page 6 31/3/10, 2:56 PM
: 02 Fax: 02 9954 1750 E : ius.com.au www.ius.com.auLevel 20, 100 Miller Street North Sydney New South Wales 2060
Postal: PO Box 6215 North Sydney NSW 2060 Australia
Tel 8912 7200 mail phil.collins@ Web:
ABN 32 074 494 885 AFSL 237881
International Underwriting Services Pty Limited
For more information please call:Phil Collins, Stuart Rowe or John Cavana on 02 8912 7282
Income Protection Group Life Total DisabilityCritical Illness Salary Continuance
We’re Australian owned and managed and we specialise in Group Risk Insurance.
Our claims consultants are only empowered to claims, decline them. Only our managementteam can decline a claim.Claimants always speak to a ‘real’ person - not a voicemail system.We survey claimants to ensure our claims service is consistently excellent
pay not
.
George Hodgson, Group Managing Director, IUS.
As you might expect, we intend to further extend our market lead. We will do so bycontinuing to provide our superannuation clients with outstanding risk insurance
Winning the inauguralacknowledges our commitment to delivering consistent market-leading service,
Super Review Service Level Provider of the Year Award
including claims service to superannuation funds.,
products, each of which are supported by proven service excellence.
Three examples of how our strong service focus is applied to claims management:
These are just some examples that support our claim to service excellence. There are others, so whynot call us to decide if we are as good as we say we are?
PROVEN SERVICE EXCELLENCE
IUSIUSYour Australian Insurance Partner
AD_SRIUSAPR_10.pdf Page 1 26/3/10, 11:42 AM
SUPERREVIEW * APRIL 2010
8 NEWS www.superreview.com.au
Apathy falling, but lack of trust in super a concernAPATHY towards superannuation isfalling away, but trust in super is downand fewer people feel they are preparedfor retirement, according to the MercerSuperannuation Sentiment Index.
The online survey of 1,033 full-timeworking Australians aged 25-65 years wasconducted in December 2009, and re-vealed that sentiment towards super de-clined from a rating of 42 out of 100 inDecember 2008 to 37 out of 100 in De-cember 2009. Only 41 per cent rated theirsuperannuation fund as trustworthy, adecline of 11 per cent since December2008. While 58 per cent said they were‘very optimistic’ or ‘fairly optimistic’ theeconomy would improve following recentshare market gains, only 11 per cent of
working Australians felt they were thor-oughly prepared for retirement.
Respondents listed loss in value, nothaving enough funds for retirement, lowgrowth and low returns as their top con-cerns about super.
Despite a general perception that manyAustralians are apathetic towards theirsuper, the survey showed that 17 per centrated their knowledge of superannuationas strong or sophisticated, while 55 percent are aspiring to reach that level ofknowledge.
Managing director and marketleader at Mercer, Australia and NewZealand, David Anderson noted in thereport that while recent events havetested faith in the system, “they have
also shaken Australians out of the ap-athy that typified the attitudes manyhave had towards their superannuation”.
However, the survey revealed thatgaps in knowledge remain. One in fivedid not know the investment optiontheir super was in, and one in four didnot know their current superannuationbalance.
The survey also found that in look-ing for advice, 48 per cent of investorsconsidered approaching their superfund while 43 per cent considered a fi-nancial adviser.
Anderson said with superannuationnow the subject of two significant gov-ernment reviews, the industry has a“once-in-a-generation” opportunity forthe Government to make changes thatwill increase the effectiveness androbustness of the super system. SR
Make comparing funds easier, says ASFA THE Association of Superan-nuation Funds of Australia(ASFA) has called for commonstandards to be applied to su-perannuation fund investmentoptions and definitions to makecomparing fund performanceseasier.
The ASFA call has come on theback of the latest Australian Pru-dential Regulation Authority(APRA) fund level data, whichwas described by the Investmentand Financial Services Associ-ation (IFSA) as being virtuallymeaningless but lauded by the In-dustry Super Network as proofof the outperformance of indus-try funds.
The APRA data, covered the pe-
riod to the end of June last year,thus missing at least six monthsto the end of December duringwhich equity markets recovered(assisting retail master truststo outperform industry funds).
However, ASFA chief executivePauline Vamos called for easiercomparison of fund data, sayingmembers deserved to have infor-mation presented to them in aclear and simple format so theycould better understand the levelof risk in their portfolio and beable to compare different invest-ment options across funds.
“Members also deserve toknow what their fund is payingto manage the underlying as-sets,” she said.
Vamos said ASFA would be call-ing on the Cooper Review to setout requirements for funds re-garding how they disclosed in-vestment returns, levels of riskand fees. SR
Australians ready toembrace higher SGTHE Association of Super-annuation Funds of Aus-tralia (ASFA) has pointed tothe additional $10 billion ayear being paid into super-annuation accounts – on topof the 9 per cent super guar-antee (SG) – as evidence thatworkers are prepared to ac-cept an increase in the SG.
ASFA chief executivePauline Vamos also said thedata demonstrated many em-ployers recognised that a 9per cent SG was insufficientto fund a reasonable lifestylein retirement.
“A great many employers aregoing above and beyond thelegal requirements to help theiremployees achieve dignity inretirement,” Vamos said.
According to the research re-leased by ASFA, 23 per cent ofall wage and salary earners re-ceive employer contributionsabove 9 per cent – typically inthe range of 10-12 per cent.
“We have found there aresome employer contributionsthat are well in excess of thisamount, particularly for em-ployees in defined benefitfunds. Critics of increasing theSG say that going from 9 percent to 12 per cent is too big ajump. Today’s research showsthat, already, nearly a quarter
of the workforce is receiving,on average, between 10 percent and 12 per cent.”
The results of the researchadd weight to the argumentput forward by most industrybodies that the SG should beincreased. A Coredata surveycommissioned by the Aus-tralian Institute of Superan-nuation Trustees found thatmore than 60 per cent of thosesurveyed would support an in-crease in the SG and would beprepared to pay for the in-creased contribution fromwages.
Commenting on the releaseof its research, ASFA said itpointed to the need to in-crease the SG to 12 per cent –a move the public is willing toaccept.
“Today’s research supportsthe widespread desire from thecommunity at large and recentcalls by a number of prominentindustrial and political figuresfor an increase in the SG from9 per cent to 12 per cent.”
ASFA said the industriesmost likely to provide contri-butions above the SG arethose where the public sectordominates – along with theoil, mining, construction,banking and finance/invest-ment industries. SR
David Anderson
ACCC blocks Registries acquisitionTHE company that controls Australian Adminis-tration Services, Link Market Services, has founditself rebuffed by the Australian Competitionand Consumer Commission (ACCC) over its bid toacquire a specialist securities registration business,Registries Limited.
The competition regulator announced that it in-tends to oppose the acquisition because it has con-cluded it would be likely to substantially lessencompetition in the national market for securi-ties registration and related services to listed com-panies and other entities with similar requirements,leading to higher prices and reduced quality ofservice.
The regulator said it had conducted extensive en-quiries with listed companies, registry service
providers, the Australian Securities Exchange andother interested parties.
“These enquiries indicated that the proposed ac-quisition would remove one of a [very small number]of registry service providers, leaving the mergedfirm and Computershareas the two largest, with twovery small competitors,” the ACCC announcementsaid. It said in addition, its enquiries had revealed thatRegistries currently plays an important role in themarket, aggressively marketing and discounting itsservices to attract new clients.
“The proposed acquisition would therefore removean important competitive discipline on Link andthe only other major competitor, Computershare, lead-ing to higher prices and reduced pressure to improveservices,” the ACCC announcement said. SR
Pauline Vamos
SRAPR_10_A.PG008.pdf Page 8 31/3/10, 4:12 PM
Industry super funds’ boards used as ‘retirement homes’EMPLOYER organisations andunions need to stop using in-dustry super fund trustee boardsas retirement homes, accordingto Australian Workers’ Unionfederal secretary Paul Howes.
Howes told the Conference ofMajor Superannuation Fundsthat membership of a trusteeboard should not be regarded as a
retirement sinecure.He said that, instead, funds need-
ed to take a more professional ap-proach and seek to attract the righttypes of expertise. Howes said superwas simply too important to be re-garded as a retirement past time.
“We need to find ways to attractthe right people and retain them,”he said. SR
Fund execs not immune to remuneration scrutinyINDUSTRY superannuation funds have ac-knowledged that the remuneration scrutiny di-rected at financial planners will ultimately reflectback on salaries paid to super fund executives.
Australian Institute of SuperannuationTrustees (AIST) research officer Andrew Barrhas told the Conference of Major Superannua-tion Funds that the scrutiny on remunerationrisked “the blow torch being turned back on us”.
Explaining the AIST’s approach to the Coop-er Review, he said the likelihood of scrutinybeing turned on levels of fund executive re-muneration had resulted in a recommendation
that funds make such information public. Barrsaid the AIST was recommending that memberfunds publish the remuneration of their top fiveexecutives in aggregate.
However, he suggested it would be open tofunds to provide more detail if they saw fit.
Barr said the AIST had also recommendedthat superannuation ratings houses make theircommercial arrangements with funds moretransparent.
He said that if funds had paid to be rated thenmembers should be made aware of the natureof that transaction. SR
Time to shift cost of super mistakesEMPLOYERS who persist-ently fail to provide accurateinformation around super-annuation contributionsshould face monetary penal-ties, according to the chair-man of the Cooper Review, Je-remy Cooper.
Cooper told the Confer-ence of Major Superannu-ation Funds that suchmeasures were justified bythe cost of erroneous infor-mation on the super system.
Cooper’s comments cameat the same time as he con-firmed the degree to whichAustralian employers re-mained trapped in a paper-based system rather thanembracing electronic fundstransfers.
He said that as many as 38per cent of employers werestill using cheques to pay
the superannuation guar-antee and half of that num-ber wanted to keep it thatway. Cooper said this paper-based approach was costlyand ultimately needed to beaddressed.
He said that where pro-cessing contributions cur-rently cost in the order of fivecents per transaction, it wasbelieved possible to get itdown to as little as two cents.
Cooper said that if em-ployers were to be penalisedfor persistent mistakes, themoney might be paid to theaffected super fund or theAustralian Taxation Of-fice. He said the penaltyshould reflect the time andcost of correcting the mis-takes flowing from the pro-vision of persistently incor-rect data. SR
APRIL 2010 * SUPERREVIEW
Cooper finally hits positive noteTHE Cooper Review into su-perannuation has finally wonbroad industry endorsement byreleasing a second phase pre-liminary report almost entirelydedicated towards improvingthe efficiency and effectivenessof the superannuation indus-try’s back-office.
The second phase preliminaryreport represented a broad con-
firmation of points raised by thechairman of the Cooper Review,Jeremy Cooper, at the Conferenceof Major Superannuation Funds(CMSF) in Brisbane, where he re-ferred to bringing funds’ back-of-fices into the modern age viabroader use of Tax File Numbersand electronic funds transfer tech-nologies.
The report won the almost
immediate endorsement of theInvestment and Financial Ser-vices Association (IFSA), withits chief executive, John Brog-den, saying Cooper should becongratulated for the Super-Stream initiative as almost all theinitiatives were ones that wouldassist the industry to functionmore efficiently, thereby lower-ing administration costs.
For its part, the Australian In-stitute of SuperannuationTrustees (AIST) described theSuperStream proposals as abreakthrough in modernising theindustry.
AIST president-elect GerardNoonan said the recommenda-tions would serve to improve ef-ficiency and reduce costs acrossthe industry. SR
Service as critical aspricing in insurancePREMIUM pricing is no longerthe single most critical issue forsuperannuation funds looking toissue tenders for their group in-surance needs.
The Conference of Major Su-perannuation Funds was told byIndustry Funds Services’ insur-ance broking principal of grouprisk, Nick Galanakis, that servicedelivery was now regarded as beingan equally key issue.
“Premium price is no longer thebig issue, but sustainability of pre-mium price is certainly an issue,”he said.
Galanakis said if an insurercould not sustain its premium pricethen this was ultimately reflect-ed in a diminution in services.
“If insurers are not making theright return on capital then serv-ices are affected,” he said.
Hannover Life Re senior mar-keting actuary Rod Berry saidtrustees should regard price as im-portant but not the only issue. SR
John Brogden
THEFederal Government has beenurged to utilise the recommenda-tions of the Cooper and Henry re-views and be “bold and brave” in for-mulating a new super system.
The chief executive of the Aus-tralian Institute of Superannu-ation Trustees (AIST), FionaReynolds, used her opening ad-dress to the Conference of MajorSuperannuation Funds to saythere was a need for the Rudd Gov-ernment to develop a super strat-egy for the next 20 years.
She said in moving forward on therecommendations of the Cooper andHenry reviews, the Governmentwould need to work closely with thesuperannuation industry.
In doing so, Reynolds pointed toAIST research suggesting a strongmajority of Australians wantedto lift the Superannuation Guar-antee to at least 12 per cent andthen 15 per cent.
Her words came just ahead ofthe Federal Secretary of the Aus-tralian Workers’ Union, Paul
Howes, calling on the Governmentto commit to raising the super-annuation guarantee.
Howes said he remained com-mitted to the lifting the superan-nuation guarantee but urged thatappropriate safeguards be put inplace, including prohibiting bor-rowing in super. He said any movetowards allowing borrowing insuper would be counterproductiveto achieving retirement incomesadequacy.
Howes said Australia’s compul-sory super regime stood as one ofthe great achievements of the post-war era. SR
Reynolds calls for brave new world
www.superreview.com.au CMSF ROUND-UP 9
Fiona Reynolds
SRAPR_10.PG009.pdf Page 9 31/3/10, 2:59 PM
Cutting to the chase
When the dust finallysettles on the Coop-er Review, it is likely
that its Phase Two reportdubbed ‘SuperStream’ will beseen as its core achievement– because it delivered pre-cisely what the industryagrees is needed, and pre-cisely what the Governmentsaid it wanted.
While the terms of refer-ence of the Cooper Reviewtraversed a range of issues,at their core were the dualobjectives of efficiency andcost effectiveness. Somemight argue that if reviewchairman Jeremy Cooperand his panel had proceed-ed more directly to thosepoints, a great deal of timeand energy would have beensaved.
In spelling out what wasmeant by ‘efficiency’, the
terms of reference stated:“Ensuring the most efficientoperation of the superannu-ation system for all mem-bers, whether active or pas-sive members and whethermaking compulsory or vol-untary contributions, in-cluding removing unneces-sary complexities from thesystem and ensuring, inlight of its compulsory na-ture, that it operates in themost cost-effective mannerand in the best interests ofmembers.”
Indeed, any astute readingof the review terms of ref-erence makes clear that theGovernment was never in thebusiness of looking for areinvention of the wheel. Re-flecting the words of the for-mer Minister for FinancialServices, Superannuationand Corporate Law, SenatorNick Sherry, it was simplylooking for a “renovation” ofthe existing house.
Thus, by bringing down aninterim report recommend-ing a streamlining of admin-istration and processingarrangements relating to su-perannuation, the Cooper
Review in late March final-ly delivered the superannu-ation industry something ca-pable of delivering tangibleand long-lasting improve-ments.
What the interim reportdoes is pull together manylong-recognised initiativescapable of making the run-ning of superannuationfunds more cost effectiveand therefore a betterproposition for members.Those things include theuse of Tax File Numbers(TFNs) as common identi-fiers, the greater use of elec-tronic funds transfers and arange of other changes ca-pable of cutting down on redtape.
Given the number of yearsthe superannuation industryhas been lobbying for the useof TFNs and electronic fundstransfers and the degree towhich these desires were re-flected in virtually all of themajor submissions, it was lit-tle wonder that Cooper’s sec-ond phase report was warm-ly welcomed by virtually allthe industry players.
The recommendations will
also doubtless be welcomedby a Government that hasclearly been looking for ini-tiatives capable of improvingthe superannuation industry,without unduly affecting itsfundamentally sound under-pinnings and therefore un-dermining confidence.
However the changesbeing recommended are notsomething that can beachieved overnight. In cir-cumstances where the re-cent Conference of Major Su-perannuation Funds was toldthat as many as 39 per centof employers are still usingpaper-based methods to paythe superannuation guaran-tee, a reasonable transitionto new arrangements wouldseem necessary.
Furthermore, the Govern-ment would be foolish to acton compulsory electronic fil-ings until such time as itsMedicare superannuationclearing house has provedworkable – and until suchtime as the various superan-nuation funds and adminis-trators have gotten their acttogether.
The starting point for a vi-able shift to a fully electron-ic superannuation contribu-tions regime will be acommon methodology –something which does not yetexist, notwithstanding recentprogress between three of the
four major administrators.Nor can the changes being
recommended by Cooper beachieved without legislativeand regulatory change. Thus,it may be well into 2011 oreven 2012 before members ofAustralian superannuationfunds see any of the benefitsactually flowing from the so-called SuperStream.
It is now more than twoyears since Sherry firstflagged the Cooper Review,and it is clearly at risk ofbeing overwhelmed by therealities generated by the po-litical calendar. There areclearly those in the Govern-ment who believe that itsfindings will represent a lowpriority for a political partylooking to reassert itself inthe polls.
While the SuperStreamproposals will undoubtedlygenerate genuine benefitsfor the superannuation in-dustry, the more vital issueconfronting super funds iswhat will be delivered in next month’s FederalBudget.
In circumstances wheretinkering with the superan-nuation settings in the 2009Budget served to undermineconfidence in super, the in-dustry should be hoping fora more positive contributionfrom the Government thisyear. SR
Making the back-office of superannuation more effective
and efficient ought to have been a ‘no-brainer’ for the
Cooper Review.
Mike Taylor
SUPERREVIEW * APRIL 2010
10 EDITORIAL www.superreview.com.au
RREEEEDD BBUUSSIINNEESSSS IINNFFOORRMMAATTIIOONN475 Victoria Avenue, Chatswood NSW 2067Locked Bag 2999, Chatswood Delivery Centre, Chatswood NSW 2067Ph: (02) 9422 2999 Fax: (02) 9422 2822www.reedbusiness.com.au
FR: There’s a commitment bythe Government as well on theefficiency side, so I think thetypes of things that Coopertalked about yesterday in termsof the tax file numbers, in termsof making rollovers easier, elec-tronic commerce, I think that’sfairly safe ground. The industrypretty much thinks that thatshould happen, the Govern-ment thinks it should happen,and the panel thinks it shouldhappen. So you wouldn’t expectthat there was any reason whyit can’t happen except thatthere are a number of parts thatneed to come together.
To make it work properly youhave to say to employers thatyou’ve got to pay electronically,and you obviously need to give
them a bit of time to transition,and things like that. And we needthe tax file number, so it all hasto come together to make itwork. So the Government stillhas to tell employers things thatthey might not want to hear –that can be difficult sometimes.But I think that they’re com-mitted enough to the efficiencyside that it will happen.
And I suppose if we get noth-ing, if nothing else comes out ofthe review but we’re able to bea much more efficient industry,it’s easier for employers to trans-act, it’s easier for members totransact, we clean up the lostaccounts problem, then that’s
fairly significant.
RM: I think most employerswill welcome it. I know in our ex-perience, once you convert em-ployers across from paper-basedmanual systems to electronic sys-tems, once you make it easier forthem, like most of us with newtechnology, once we understandit we embrace it. So I think thesorts of things Cooper was talk-ing about and you’re talkingabout, I think most employerswill embrace that; it will makelife easier for them. I don’t thinkthere will be a great problem.
PC: I agree with that. I thinkwhat we saw yesterday was thatthere was a greater concentra-tion on those issues and I agree... I think there’s now some sortof agreement that they’re the keyissues we need to concentrateon, and I’m sure with supportfrom the industry [it’ll] happen.
You asked the question Mike,is the report going to producewhat the industry wants? Whatdoes the industry want out ofthis report? I’m not quite sure Iknow the answer to that, so I’mnot sure. We didn’t ask for the
report. That doesn’t mean it’swrong or not a good idea, butI think we had some concernsabout where Cooper was head-ed in the first instance withsome fairly ‘out there’ state-ments, which appear to havebeen pulled back a bit. But I’mjust not sure what the indus-try itself wants out of this. Itmay well be no more than whatwe’re talking about here, ad-ministrative efficiencies, whichI think now are very much pos-sible in terms of where the con-versation seems to be going. Butif it’s too extensive in terms ofintrusion into the way the in-dustry is run and an industrythat I believe is in fact fairly ef-ficient rather than inefficient,then I’m not sure that’s what theindustry wants. So I’m not sureof the answer to that one.
FR: Well I think from ourpoint of view, what we wantedto see from the review was thatit finally dealt with a whole lotof issues that have been hang-ing around for as many years aswe’ve all worked in super. All ofthese efficiency issues, memberprotection, the tax file number,
all of those things have beenproblems and have issues aboutcosts, hidden fees and charges,costs and financial planning. SoI think from our point of viewwe wanted to see those kinds ofissues dealt with, which waswhy we were fairly strong oncriticising the architecture, be-cause we felt that was going [inthe wrong direction]. Now we’repleased to see yesterday that heseemed to move away from hisfirst thoughts.
AB: I certainly sensed Coop-er yesterday was trying to drawback expectations about whatwas coming from the review –[he] certainly focused on theefficiency side. I think we allagree with that, the majority ofmeasures that he took are goingto be really welcomed by the in-dustry and would make a dif-ference, and he really demon-strated the appetite andcommitment to really tacklesome meaty efficiency issuesthere around administrationand duplicate cover members,lost members, and member pro-tection. I thought all of that wasreally good, but it was only one
component of what we origi-nally thought was much morethan a review.
ABarr: I’d agree with what’sbeen said about the tone and theway that things appear to havebeen moving, but I think we’dbetter not be complacent aboutthe implementation phase of itbecause there’s a lot of diversi-ty, there’s a lot of different wayspeople do business in the in-dustry. If we go in quickly and tryand impose something, we’llhave a lot more difficulty thanwe really should have.
RM: [A] consultation processhas to take place because I hearpoliticians and others saying theindustry needs to be more ef-ficient. I think the major play-ers, the administrators, the in-surers, we all want to make itmore efficient, but every timewe take a step forward thereseem to be two new regulationsor requirements that just makeit more and more difficult. Sohelp us be more efficient, andyou’ll see costs down.
I think administrators, in-surers, funds managers, a lotwould be happy to drop costsif the environment was suchwhere they could do it. Butwhen you look at the complex-ity right now, it’s not surprisingthat administration costs whatit does. In fact, I’m surprisedit doesn’t cost more when yousee what the administrator hasto do behind the scenes. Sothat’s why I was really welcom-ing what Cooper said yesterday,because I think that really willbe a step in the right direction.
BREAKING DOWN BARRIERSMMTT:: OOnnee ooff tthhee tthhiinnggss tthhaatt
RM: I think you’ve got toforce it on them, and I don’tbelieve that just becausethey’re a small employer theycan’t do it. Virtually everyonearound this table pays by BPayor uses some form of elec-tronic banking, it’s not thatdifficult. I think we’ve got toforce it upon those employers.
JF: I don’t share your en-thusiasm about employerswanting to comply though. It’snot within our jurisdiction, butwe get an awful lot of callsfrom people whose employerhasn’t paid the surcharge andwe refer them to the tax office.And I think they get hundredsof thousands of complaintsabout that ... You have to havesome form of compulsion andsome form of penalty becausewhy else would [small busi-nesses] get on board? But Idid like the idea of tying thepayroll cycle into the super-annuation contribution cyclefor those people because Ithink that would make it eas-ier; if they were of a mind tocomply, it would make it mucheasier for them to comply.
FR: I agree. And so that’s an-other change for employers.
ABarr: And it would make ita lot closer to all of the electronic
stuff that goes on the payroll.
FR: That’s right.
RM: There’s nothing to stopthem doing that today, and I dowork with a lot of employers.
ABarr: What’s stopping themtoday? That there’s a mindsetthat this is an impost. ‘I don’thave to pay it until the end ofour quarter so I’m going to hangoff as long as I can’.
JF: And ‘I’ve got a cash flowproblem, why would I pay mysuper earlier than that?’.
ABarr: Yeah.
PC: Yeah why wouldn’t youhang off?
FR: I understand why em-ployers still use cheques, so Iwas surprised when Cooper saidhe didn’t quite understand whypeople use cheques. It’s becauseif you work in a small organi-sation and it might not be your
business, you might be runningit. You have a system in placewhere you’ve got cheques, twopeople sign the cheques, youcan see the invoice, you can seethe documentation – all of that;it gives you some comfort. Yesyou can go and have some com-plicated sort of system wheretwo people have to stand thereand ‘put in the pin codes’ andwhat not, but it can often be dif-ficult to have your two signa-tories in the same place. We’vetaken a long time to actuallymove more online in our ownbusiness [for] paying our billsfor security reasons and fraudand all of those sorts of things,and I still have a level of dis-comfort about it.
ABarr: If you were going topay it quarterly and you’re goingto try and do it online, howmany employers are going to beable to remember the passwordto their super fund site for threemonths? Forget it. ‘What wasthat password? On hang it, I’llget the chequebook out, deal
with it and it’s done.’ I reckonthat’s probably what happens.
RM: I think we’re making ex-cuses for them. There’s alwaysa good excuse not to do some-thing. We’ve got a myriad ofpasswords to things at work, ourbanks and everything else andwe cope with it; we may not likeit, but we cope with it.
ABarr: And there’s no excus-es for getting your payrollwrong, and if you link the superto payroll there’d be no excus-es for getting your super wrong.
JF: That’s right, and get thesame penalties or similarpenalties.
RM: And that is the secret,because the amount of mis-matched contributions that ad-ministrators still receive wherethe paper says $10,000 and thecheque says $9,900. And theamount of work that an ad-ministrator has to put in is oneof the inefficiencies – it’s a hugeamount of unallocated contri-butions or contributions thatcan’t be reconciled.
PC: I think it’s the only way it’llwork. [And it must be capable ofbeing] enforced properly.
Continued on page 14 ☞
Andrew Bolderstone
SRAPR_10.PG013.pdf Page 13 31/3/10, 3:46 PM
SUPERREVIEW * APRIL 2010
14 CMSF ROUND-TABLE www.superreview.com.au
JF: There’s no incentive oth-erwise, there’s no upside forthem to comply.
AB: And in all these things,change is difficult. We should-n’t underestimate small em-ployers – super may not be theirfocus and changing fromcheques to moving online orgoing fortnightly is a change,but at the end of the day thewhole system benefits fromeveryone using a consistentpractice ... The Government hasto really address this and makethe super sector more efficient.
FR: And it’s not going to workif at the last hurdle the Gov-ernment does not compel em-ployers to do it. That’s just goingto make it a little bit more ef-ficient, but it’s not going to goaway, and we’ll be back herein 20 years still talking about ex-actly the same issues.
PC: We are talking about asmall percentage of employers.Most employers want to do theright thing, the big ones usu-ally do because they’ve got theresources. A lot of the smallones ... if you go out to talk tothem, if you make it easier forthem, they’ll accept it. It’s onlya small percentage that seemsto be keen on not working withthe system, but they cause a lotof the work.
THE SUPER GUARANTEE DILEMMAMMTT:: WWee wweerree jjuusstt ttaallkkiinngg
FR: Well I think they won’tembrace it because it’s in the‘too hard’ basket, in that youeither have to make the em-ployers pay something – andthat’s a difficult thing for gov-ernments to do as employerswill be out there screamingabout it – or you’re going tomake individuals pay, and toa certain degree some indi-viduals won’t want to do that.We’ve just done a poll and we
asked people the questionabout getting to 12 per cent,whether they would want topay for it themselves if nec-essary and how much thatwould be, etcetera. And over60 per cent said they would beprepared to pay for it.
Like they said if you’re onan average salary of $50,000or something, this will cost you$30 a week.
JD: A week or a month?
FR: A week out of your pay,and people said yes they wouldpay for it, so I think it’s justmaking those hard decisions.I suppose we also have to waitfor the Henry Tax Review tosee what they’ve got to say. Buteven [if you look at the mod-elling that BlackRock’s JustinWood has done], it was clear
that 9 per cent is not enoughfor nearly anybody.
ABarr: Well it was interestingbecause he started that presen-tation by saying 9 per cent isenough for this person and thenhe painted the rosiest possiblepicture he could. But I thinkwhat that presentation reallyhighlighted is that the difficultpart about making any decisionin the adequacies sphere iswhat’s enough not only at re-tirement, but at every differentstage in retirement. I think we’vegot to have a bigger, deeper di-alogue or debate about all thosedifferent phases, the active, thepassive, the frail, whatever theyare. How much you need? Howyou’re going to get there? I thinkwe’ve got a more sophisticatedargument ahead of us.
FR: And when I was sittingthere and listening to Cooperyesterday I was thinking maybeit isn’t that you need to increasethe super guarantee to 12 percent for every age group, maybeour way of thinking about thefuture is having [a 9 per centbase, but you have to increaseyour contributions later in life].You’re more likely to be on alower income when you’reyounger, therefore, you’re nottaking money away from that,then as you get older you goup to 10 per cent, 11 per cent,12 per cent. And, presumably,you would be earning moremoney at that stage.
RM: The ATO can’t enforceemployers that pay and thosethat don’t pay.
FR: I know it will be com-plicated; it’s just that look-ing at the way some of the ar-guments about when peopleat the lower end can’t payextra money, employers don’t
want to pay for those people.
ABarr: I think you’d have todo it as a member contribution,otherwise you’d have labourmarket distortions.
JF: What he says about theway our demography is going,you’d actually do it the otherway around. You’d hit the ado-lescents, who are now adoles-cent till they’re 30 apparently,with 12 per cent at the begin-ning. You’d use the magic ofcompound interest and thenwhen we’re all having our ba-bies in our 40s and while they’restill at school in our 50s, you’ddrop to 9 per cent and let that12 per cent work for you.
FR: Cooper sort of dealt withthat in terms of how you aregoing to miss out on the com-pounding, but it was reallyabout affordability. And Ithought [he made] good ar-guments about the caps and not[letting them] go down againfor those people over 50. And heshowed, particularly for womenwho have been out of the work-force, the amount that you thenhave to catch up later in lifeto even be at the same standardas the person who’s done the9 per cent on the lower washuge.
JF: Yeah, you can’t do it.
PC: The question you askedin the first place is why wehaven’t done it rather than whatwe should be doing. You an-swered it very well right at thefront. Fiona and I think theproblem is that things – and thiswas alluded to yesterday byCooper and others – are quitedifferent now to when the orig-inal proposition was put inplace. We had a national wagecase procedure and obviously
Cooper Review – great expectations?☞ Continued from page 13
Jocelyn Furlan
SRAPR_10.PG014.pdf Page 14 31/3/10, 3:47 PM
www.superreview.com.au CMSF ROUND-TABLE 15
APRIL 2010 * SUPERREVIEW
the Hawke Government usedthat to successfully introducethis as a trade off for a wage in-crease, which was accepted.Now that process is almost im-possible to replicate under oursystem today. So it does get backto someone having to say ‘welleither the Government is goingto tell the employers they haveto do it or people have to frontup to the plate’. And even thathas to be done in a different wayin terms of the national cover-age that it was back at the start.So I think the issue is a lot hard-er now from that point of view.
It’s also a lot harder because Ithink that there is a misconcep-tion among the rank and fileworkers ... that 9 per cent is a lotof money already and another3 per cent making it 12 per centand certainly to 15 per cent isa huge amount of money. And it’sharder to get that concept ac-cepted than it might have beenin the first place, where there wasa trade off to wages.
So I think we all agree onwhat should happen or we haveviews on the best ways of im-plementing an increase, whichwe probably agree should hap-pen, but I think it is very diffi-cult today, a lot more difficultthan it was when the 3 per centwas first introduced.
FR: They need to have a planthough, don’t they? They needto finally bite the bullet andhave a plan. Even if it takes 10years to gradually bring in smallamounts that everybody can ad-just to, there’s plenty of time,employers could take it intoconsideration when they’redoing the next wage increasesover the next couple of years ...It shouldn’t really be that hard,it’s just about …
FR: Setting a long-term planand vision [comes back to a lot
of governments focusing onwhat’s going to get votes now],not what’s going to be good pub-lic policy 10 years down thetrack when they’re not going tobe the Prime Minister or theTreasurer.
ABarr: One of the problemsis that the most entrenched ad-vocates of 9 per cent is enoughis the [Federal Treasurer,Wayne Swan. He’s the only per-son who is] consistently saying9 per cent is enough.
AB: It is about political will,ultimately. I think there’senough research out there toshow that 9 per cent is not suf-ficient and everyone is in agree-
ment with that. Really, is it pop-ular from a government per-ceptive to actually increase itto 12 per cent and to, ultimately,15 per cent?
FR: Cooper had some goodpoints yesterday about capac-ity to pay and when you wouldpay, but I think that affects thecore aspect that 9 per cent isstill not enough as a base level.
PC: Nearly 20 years ago I washaving this debate: employers,small employers couldn’t affordthe extra 6 per cent to take it upto 9 per cent and it was goingto bankrupt hundreds and thou-sands of small businesses – it wasthe most unpopular political
move. Keating had the fortitudeto do it and to his credit it washis legacy and we accept it ...I can’t see what is such a greatproblem with saying over thenext three or four years that wewill increase it from 9 per centto 12 per cent? As you said,everybody except Treasury ac-cepts that that’s an appropriateminimum level.
AB: At the end of the day, itprobably will be another 3 percent. Another 6 per cent will putsome small businesses underhuge pressure, [but] so wouldthe original 3 per cent, so doesworkers compensation insur-ance, so does general insuranceon their building, so does every-thing else. Unfortunately, Ithink it’s a matter of principlethat governments and what-ever agree that this is a logi-cal and [sensible thing and oneof the costs you just have tobear]. And some of those verysmall organisations would prob-ably go to the wall for someother reason if it wasn’t the 3per cent anyway.
I don’t think you can dismissthat it does have an impost onparticularly small businessesand it may, in the most extremecases, take them to perhaps acliff face. But to me the biggerpicture is what’s required, andthere is always going to besomething in a very small busi-ness, the volatile nature of themand their cash flows and what-ever, that will probably pushthem to the brink.
This is only one of the wholeraft of things that’s likely to dothat and I don’t think it can beput in as a reason not to progresswith what is a sound, funda-mental requirement for our long-term standard of living.
ABarr: Well, the other thingthat’s a bit different now is that
there’s a lot more discussion andacceptance of the argument thateven increasing employer con-tributions ends up getting paidby employees through the wageprocess ... That supports your ar-gument that it actually won’tsend employers to the wall, butthen it cuts across the accept-ability of the proposal with thegeneral punter, so I think we’vegot to acknowledge that argu-ment out there, take a positionon it after careful considerationof how it plays.
AB: You can really gauge thecost on employers if you imple-ment it and they’ve got a longenough timeframe to be able tofactor it into their planning. Youknow over a short timeframe,yes it can have an impact, butover a 10 or even 15-year peri-od [it’s] a far more modest im-pact. Ultimately, the 9 per cent,the 12 per cent, an extra 3 percent or 6 per cent does needto be paid for by someone and,ultimately, it’s paid for by theemployee.
JF: Maybe the way to sell itto Treasury is to do it commen-surately with the increases in ef-ficiencies … If [Treasury] says9 per cent is enough, they mustbe assuming that everyone’s onlygot one account and paying onelot of administrative fees and en-gaged with their super and all ofthat sort of stuff to get themthere, the rosy picture.
ABarr: The killer for themis that for the very low-incomepeople, their modelling says ifyou go more than 9 per centyou’re giving them a replace-ment rate of greater than 100per cent. So they’re richer in re-tirement. The thing they wantto avoid is people being richerin retirement than they were inworking life. SR
Andrew Barr
SRAPR_10.PG015.pdf Page 15 31/3/10, 3:48 PM
SUPERREVIEW * APRIL 2010
16 FINANCIAL PLANNING www.superreview.com.au
Between intra-fundadvice and the on-going fees versus
commissions debate, thelast 12 months have helda certain amount of sig-nificance for the provisionof financial advicethrough super. Yet despitea range of super-based fi-nancial planning options,from online tools to face-to-face plans, the ques-tion remains as to how farthe super industry hascome with respect to ad-vice delivery.
The answer, accordingto Chris Winton, head ofEquipsuper FinancialPlanning, is that to a largeextent the jury is still out.
“It’s actually a hardquestion to answer frommy perspective,” he said.“Being part of an indus-try fund can be very insu-lar but as a whole, I thinkthe industry is heading inthe right direction.
“There’s still a way to gobut we’re certainly furtheralong the path than wewere 12 months ago.”
Looking at the inroadsmade by her own fundspecifically, Debby Blakey,executive manager ofmember advice for largehealth industry fundHESTA, said there hadbeen significant progressmade in the last four years.
“HESTA has developed
our advice offering overthe last four years and webelieve we are deliveringfinancial advice more ef-fectively,” she said. “Al-though there is still po-tential to improve theeffectiveness, we are de-livering financial adviceto significantly moremembers following theintra-fund relief than wewere able to prior to that.”
FINANCIAL PLANNING Reflecting on what had
influenced super-based fi-nancial planning most inthe last 12 months, Jo-Ann Bloch, chief execu-tive officer of the Finan-cial Planning Association(FPA), said that what hadbeen accomplished as aresult of the intra-fundadvice relief provided bythe Australian Securitiesand Investments Com-mission (ASIC) had to becongratulated.
“I think what the Gov-ernment has managed todo is open up a vehicle thatprovides low cost financialadvice. Quite obviously,that is a good thing,” shesaid. “More Australians aregetting access to adviceand they’re getting accessto it earlier.
“They’ve tapped intoan enormous need, so I think they’re to be congratulated.”
Bloch added that theFPA had never takenissue with what intra-fund advice aimed toachieve. The problem, ac-cording to Bloch, was theuneven playing field thathad been created as aconsequence.
“The FPA’s issue is thatASIC is giving super fundtrustees a means of ac-cessing that financial ad-vice vehicle where nosimilar means exists forfinancial planners,” shesaid. “But we’re no longerwhinging about that as wemay have in the past.
“Instead, we’re nowlodging a submission toASIC asking that finan-cial planners be grantedthat same intra-fund ad-vice access,” Bloch con-tinued. “We may nothave been impressedwith how intra-fund ad-vice has been put inplace, but there is ab-solutely no doubt that itis a substantial step for-ward in delivering ad-vice to more Australians.
“We’re just trying tolevel the playing field.”
But despite the factthat ASIC’s intra-fund ad-vice relief was a signifi-cant dispensation when itcomes to financial advicewithin super, it remainsan opportunity not allfunds have chosen to
avail themselves of, andfor Bloch, that hesitationis significant.
“Super funds are cer-tainly looking to use RG200 [ASIC RegulatoryGuide 200] and the lim-ited advice it allows, but totheir credit they seem tobe adopting a conservativeapproach to that advice,”she said. “I think despite
the relief available, mosttrustees have a nervous-ness about giving theirmembers the right advice.
“In many ways, they’veadopted a position simi-lar to that of the FPA.”
For Blakey, however, thefact that not all trusteeshave rushed to take ad-vantage of intra-fund ad-vice is simply indicative of
where their super fundsare placed in relation toexisting financial plan-ning arrangements.
“I think some fundshave already imple-mented outsourced ad-vice models,” she said.“That is where the adviceis provided under a serv-ice provider’s AFSL[Australian Financial
The regulatory concessions that have cleared the
way for the provision of intra-fund advice
represented a major breakthrough but, as DAMON
TAYLOR reports, much remains up in the air.
Working to a plan
SRAPR_10.PG016.pdf Page 16 31/3/10, 3:02 PM
www.superreview.com.au FINANCIAL PLANNING 17
APRIL 2010 * SUPERREVIEW
Services Licence]. “For these funds it
may be difficult to em-brace the intra-fund pro-visions since the intra-fund exemption onlyapplies to the super fundtrustee,” Blakey contin-ued. “Hence they wouldhave to unwind their ex-isting model or at leastappoint the advisers as
authorised representativesof the trustee in order totake advantage of intra-fund advice provisions.
“Super funds that havenot yet developed an out-sourced advice model arelikely to take advantageof the intra-fund advicerelief.”
Speaking to the ra-tionale behind HESTA’s
decision to offer its mem-bers intra-fund advice,Blakey said that whenASIC’s intra-fund advicerelief arrived, the fundhad already implement-ed a limited advice modelunder its own licence.
“Hence we had a per-sonal advice AFSL andthe framework to deliv-er personal advice tomembers on superannu-ation,” she said. “The de-cision to offer intra-fundadvice under the reliefwas a very easy one for usto make since it simpli-fied the process we werealready using to deliverlimited advice.
“In hindsight, the deci-sion we took some yearsago to offer members lim-ited advice on superan-nuation was an excellentone,” Blakey added. “Wemade this decision simplybecause we felt this is es-sentially what our mem-bers need – where few ofour members are seek-ing comprehensive fi-nancial advice, a signif-icant number want morethan general advice orfactual information onsuperannuation.
“So having a frameworkwhereby we can advisemembers on a suitablecontribution strategy orinvestment allocation forthem within their HESTAaccount is a very worth-while member service.”
Echoing Blakey’s sen-timents, Winton said thatwhile intra-fund adviceprovisions had been sig-nificant, a large number ofsuper funds would alreadyhave been happy with their
existing financial planningarrangements.
“Those funds alreadyoffering their members fi-nancial planning wereand are arguably prettyhappy with their currentsetups and structures,” hesaid. “But it also dependson how their financialplanning arrangementsare licensed.
“Equipsuper, for ex-ample, offers its fullservice financial plan-ning under an externalprovider,” Winton con-tinued. “For us, intra-fund advice is singleissue, limited advice.”
Offering a slightly dif-ferent viewpoint, GeoffBrooks, manager of com-munications at Equipsu-per, said that with a sig-nificant number ofmembers in a defined ben-efits scheme, the launch ofa financial planning serv-ice had been largely basedon maintaining a serviceto members following theirretirement.
“From a fund perspec-tive, our financial plan-ning scheme waslaunched two and halfyears ago under a licens-ing arrangement withHealth Super,” he said.“And retaining our mem-bership post-retirementwas a principal driver insetting it up.
“Going forward, thelimited advice question isaround delivery and, atthe moment, we’re look-ing to go through our ex-isting financial planninginfrastructure rather thanthrough the fund itself.”
Yet perhaps the more
interesting question withrespect to intra-fund ad-vice is how long it mightlast. Though it may haveoriginally been intendedas a temporary measureto assist membersthrough a severe financialcrisis, the move seems tohave gathered a numberof proponents, and ac-cording to Bloch, it is achange that might wellbecome permanent.
“I think it is here tostay,” she said. “And Iwouldn’t be surprised ifthe Government thinksnot just about giving fi-nancial planners accessto intra-fund advice butalso about extending itbeyond superannuation.
“If they’re confidentabout limited advice andconfident that the rightadvice is being given, whynot go beyond that?”Bloch asked. “There arecertainly some great op-portunities here.”
Similarly, Winton saidthat while intra-fund ad-vice might have been atemporary initiative outof the global financial cri-sis, he felt that it wassomething that couldhang around.
“Industry-wide, there’sa focus on making advicemore affordable and moreobtainable,” he said. “Andintra-fund advice feedsinto that.”
From a broader com-munications perspective,Brooks said that Equip-super’s member commu-nications research hadbeen showing less andless tolerance for infor-mation members might
deem irrelevant to theircircumstances, particu-larly in the case of theyounger demographics.
“In line with that, I sus-pect the demand for per-sonalised advice will par-allel the demand forpersonalised communi-cations,” he said. “Thereare already a number ofways in which intra-fundadvice is being delivered,whether that be online ordirect, and I think con-sumers’ increasing de-mand for relevance willprobably mean that intra-fund advice is here tostay.”
Looking at the longevi-ty of intra-fund advice aswell as how effectively itis solving the cost dilem-ma proposed by a finan-cial planner giving adviceon a single issue, Blakeyquestioned the impact ofintra-fund advice on fi-nancial planners.
“Having seen howmuch intra-fund advicecan benefit members, wecertainly feel it is hereto stay,” she said. “As morefunds offer this service,we believe it may ulti-mately become a com-mon part of basic super-annuation fund service.
“But in my opinion, itis clear that financialplanners historicallyhave not been interest-ed in the single issue ad-vice area and certainlynot if paid an appropri-ate fee for the service,”Blakey continued.“Hence I don’t see intra-fund advice having
Continued on page 18 ☞
SRAPR_10.PG017.pdf Page 17 31/3/10, 3:04 PM
SUPERREVIEW * APRIL 2010
18 FINANCIAL PLANNING www.superreview.com.au
much impact on advicedelivered by financialplanners.
“A revision of plannerremuneration models, andin particular the removalof trailing commissions orasset based advice fees ex-cept where a documentedservice agreement exists,could have an impact onthis – for example, theservice agreements forcorporate super planscould well include singleissue advice, and thatwould see financial plan-ners operating in this areain some way.”
For Bloch, the intra-fund advice dilemma isthat the system isn’t work-ing to its full potential.
“If it had the right peo-ple and competent peoplein place then I think itwould achieve its objec-tives entirely,” she said.“But the fact is, this is achange that is still fairlynew and FSR [FinancialServices Reform] is rela-tively new as well.
“We have to give it timeso that we can get its var-ious bits and pieces rightbut if we can do that, it’sa system that will be high-ly effective.”
FEES DEBATEOf course, the delivery
of financial advice has notbeen impacted by intra-fund advice alone. De-spite what seems to be aclear financial services in-dustry direction towardsfee-for-service, the feesversus commissions de-bate seems to continue in
various quarters, but ac-cording to Brooks, not allsuper funds are con-vinced one way or theother.
“I don’t think there’s ageneral conviction oneway or the other withinEquipsuper,” he said. “ButI think the debate is morearound what you get in re-turn for what you pay.
“There’s some validity inthe concept of people notwanting to pay an upfrontcost for advice, of wantingit to instead be an almostinvisible cost,” Brooks con-tinued. “It’s a matter of psy-chology and the means ofthe person involved.
“Can they afford advicein the first place? We haveto treat the consumerwith some level of respectbecause informed choiceis important.”
By contrast, Bloch saidthat as far as she was con-cerned, the fees versuscommissions debate wasone that was well andtruly over.
“Frankly, I think thatwhile a minority may beraging on, this is a debatethat’s over,” she said. “Isuppose if there is anysort of ongoing debate,it is on whether the Gov-ernment legislates ormandates a fee-for-serv-ice or whether it leavesthe financial planning in-dustry alone to adopt thestructure itself.
“The war is over – it hasjust been perpetuated be-cause it was such a bigissue and, more particu-larly, because it was an ef-fective marketing exer-cise for various people.”
Yet the other side of thefees versus commissionsdebate is how fees canbest be transferred tomembers in exchange foradvice. Tax deductibili-ty, the ability to deductfees from super accountbalances – any number ofpayment methods havebeen proposed in thepast, but for Bloch, thereis no obvious answer.
“There’s no silver bulletanswer because no con-sumer fits into one box,”she said. “When it comesto financial advice andhow its fee is paid, the FPAis looking for four things:the advice fee can’t bepaid for by a productprovider, the fee has to bedistinct from any specif-ic product, it has to betransparent and revisit-ed annually and, finally,there needs to be an abil-ity to switch the advice feeoff,” Bloch said. “But therealso needs to be some flex-ibility because while anhourly rate might be laud-able, not everyone is ableto pay thousands of dollarsas an upfront cost andsome may only need fi-nancial advice once andthen they’re off.
“What we need is to setunderpinning principlesthat are transparent andrelevant but that also givechoice on how that feecan be paid, because withonly one system, wewould be disenfranchis-ing a whole lot of people.”
Winton said from a su-perannuation point ofview, being able to deductfinancial advice fees froma member’s account would
definitely solve a numberof the problems in advicedelivery.
“It’s certainly a waywe’d like to go and prefer-able to delivering a mem-ber any sort of bill forwhat we’re telling them,”he said. “It would allow usto engage a greater num-ber of members and solvea large part of the feeissue surrounding finan-cial advice.”
However, the hurdle,according to Brooks,would always be the solepurpose test.
“The sole purpose testis the stumbling block forthat idea,” he said. “Itwould be all well and goodif the financial advicebeing delivered appliedonly to superannuation,but problems are likely tocome when it applies topersonal advice as well.”
From Blakey’s per-spective, debate over how
advice can best be paidfor is likely to continuewithin the super industryfor some time to come.
“These outcomes maybe impacted by legisla-tive change,” she said.“But it is likely we willsee more fixed fees forservice – that is dollarfees rather than asset-based fees.
“There is no doubt thattax deductibility for per-sonal financial advice feesis now firmly on the agen-da and we may see someconcessions on this fol-lowing the various re-views,” Blakey continued.“I assume further discus-sion on this aspect for su-perannuation monies willfollow.”
REGULATIONThere seems little
doubt that despite ex-tensive discussion of feesversus commissions and
☞ Continued from page 17
Working to a plan
Our onlyrecourse was to
refer them to our
outsourcedprovider of
full financial planning advice.
SRAPR_10.PG018.pdf Page 18 31/3/10, 3:05 PM
www.superreview.com.au FINANCIAL PLANNING 19
APRIL 2010 * SUPERREVIEW
the merits and conse-quences of intra-fund ad-vice, the financial plan-ning industry, and byextension Australia’ssuper industry, is goingthrough a period of evo-lution with respect to ad-vice delivery. To date, theregulation and legislationin place around financialadvice has perhaps beenseen as provoking fear onthe part of financial plan-ners, and according toWinton, it is arguable thatthe quality of financial ad-vice has been affected asa consequence.
“I’d probably say thatcurrent regulation doesaffect the quality of fi-nancial advice,” he said.“I think financial plan-ners are always a bitfearful due to what I seeas overregulation of theindustry.
“It’s just my opinion,but I do see some areasas being a bit over thetop and I do think it im-pacts advice,” Wintoncontinued. “Adviserscan’t help but be reluc-tant to take the next stepwith the advice they maybe delivering.
“It can be a bit of adead weight.”
Winton said intra-fundadvice’s intention hadbeen to provide a bettertransition between single-issue advice and a full-fledged financial plan,and it would be interest-ing to see how well itachieved that.
“The idea with intra-fund advice is to bridgethat gap,” he said. “Butas it’s still fairly new, it
remains to be seen howeffectively it can do that.
“It sounds good in the-ory but in practice I thinkthe jury is still out.”
Blakey’s take on thestate of play of financialadvice legislation and reg-ulation was more positive.
“With the advent ofintra-fund advice, I thinkwe have a very good reg-ulatory framework,” shesaid. “Prior to the intra-fund advice relief therewas quite a gap betweengeneral advice and per-sonal advice.
“But intra-fund adviceand the guidelines issuedin RG 200 regarding thedelivery of factual infor-mation, general adviceand personal advice havecertainly filled this gap.”
Focusing on the gainsthat have already beenmade, Bloch said that de-spite its faults, FSR hadplaced the financial plan-ning industry in goodstead.
“It’s a regulatory regimethat has its flaws but is,on the whole, a robustframework,” she said. “Noone likes to be regulat-ed and there is alwaysgoing to be some degreeof frustration at both theregulation itself and at itscost, but FSR has deliv-ered good reforms andgood structure.
“The challenge is to en-sure that it remains con-temporary and relevant,”Bloch continued. “Andintra-fund advice is rep-resentative of that.
“The issues we’re see-ing are on the periphery– they’re not in the main.”
At the end of the day,the consensus seems tobe that financial adviceis something that superfund members need tohave readily available tothem. The obligationupon individual fundsis to provide that advicein such a way that theyare fulfilling their mem-bers’ needs from the verybasic to the complex.
For Blakey, that is theideal, but it is a point thatthe super industry has notyet reached.
“I don’t think we cansay yet that financial ad-vice is readily available,”she said. “There is work tobe done to further devel-op the advice programsof funds, in particular em-bracing, web advice de-livery and implementation.
“I think many fundsstill offer two extremesof advice – general ad-vice on the one end ofthe scale and full finan-cial planning on theother – with nothing inbetween,” Blakey con-tinued. “I think it is veryimportant to have some-thing in between.”
Blakey said that atHESTA, prior to the in-troduction of a limited su-perannuation advicemodel, the executives hadbeen frustrated at theirinability to advise a mem-ber on simple issues suchas how much insurancewas appropriate for theirpersonal situation.
“Our only recourse wasto refer them to our out-sourced provider of full fi-nancial planning advice,”she said. “We believe it
is very important that wenow have an educationprogram providing factu-al information and gen-eral advice, but it is equal-ly important to be ableto take the member to thenext step by giving themsimple single issue adviceat an appropriate cost,which in our case is in-cluded in their adminis-tration fees.”
From the financial
planning perspective,Bloch said that fundmembers who wereclients of financial plan-ners were obviously thebest placed with respectto advice.
“They’re certainly theones getting the rightlevel of service and theones being well lookedafter, she said. “It’s theconsumers outside of fi-nancial planning that are
the concern. “As a broad financial
services industry, we needto raise awareness of thevalue of advice, of whereit can be obtained and weneed to continue to workon its cost,” Bloch con-tinued. “Because whatwe’re aiming for is morepeople getting access tothe right advice at theright price.
“It’s that simple.” SR
SRAPR_10.PG019.pdf Page 19 31/3/10, 3:06 PM
The Australian superannua-tion industry may be re-sponding to the demands
of the Cooper Review and im-plementing changes flowingfrom recent regulatory changesand the Anti-Money Launderingand Counter Terrorism Financ-ing (AML/CTF) Act, but thechallenges confronting compli-ance teams are far from over.
Regulatory oversight andcompliance may have been thefactors that have helped theAustralian financial services in-dustry weather the global fi-nancial crisis (GFC), but fur-ther change seems inevitable.The chief executive of the As-sociation of SuperannuationFunds Australia, Pauline Vamos,believes current legislation nolonger matches what is effec-tively an evolving environment.
“I think the first thing to sayis that the super industry is in atime where it has a number ofcontrols in place to ensure com-pliance with current legislation,”she says. “Disclosure, advice,statutory returns: they’re the keyareas currently being reviewed,but that also means we have anenvironment where there is arisk of not looking at the accu-racy of those controls – simplybecause we know they’re goingto change.
“The problem is that currentregulation hasn’t kept pace withthe change that’s been occur-ring in the super industry for anumber of years now,” Vamoscontinues. “And that means wehave legislation that is now out
of step with the industry andits members’ needs. There’s amismatch there that needs tobe rectified.”
In a similar vein, AngelaThurstans, executive manag-er of compliance and risk forbuilding industry super fundCbus, says that the industry’scurrent level of legislation andcompliance requirement isprobably more complicatedthan it needs to be.
“Legislation and compliancechange has happened over anumber of years in a patchworkfashion,” she says. “And as a con-sequence, the SIS [Superan-nuation Industry SupervisionAct] and Corporations Acts arefar from the easiest pieces of leg-islation to navigate within.”
As for specific areas of leg-islative complexity, Thurstanssays that the disclosure regimepresent within the CorporationsAct is definitely a good example.
“The disclosure regime is amess, but one of the good thingscoming from [Jeremy Cooper,former deputy chairman of theAustralian Securities and In-vestment Commission (ASIC)]preliminary reports is his beliefthat [the Financial Services Re-form Act] got it wrong,” she says.“Cooper has recognised that su-perannuation is a unique prod-uct and that you can’t lump it inwith other financial servicesproducts.
“But while that recognition istimely, there are bits and piecesin the SIS Act that need lookingat as well,” Thurstans continues.
“There seems to be a habit with-in this industry of making leg-islation harder than it needsto be, of having a principal Actand then regulations that caneffectively change the entireAct. It makes for a very com-plicated compliance road map.”
Vamos says that the indus-try’s complexity issues stemfrom a number of grandfatherprovisions that exist withinsuper legislation.
“Within different productsmembers have been subject todifferent laws that were grand-fathered in,” she says. “But that’sone of the key outcomes I thinkwe’re likely to see from theCooper Review.
“SIS only really caters forsuper fund members who aren’twanting investment choice, andthe reality is that we now havean environment in which mem-bers want either guided or fullchoice – neither of which wereenvisioned originally,” Vamos
continues. “Post-retirement alsoisn’t taken into account, andthat’s key because the super sys-tem doesn’t stop at ages 55 to 60anymore.”
For Damian Hill, chief ex-ecutive officer of the RetailEmployees’ SuperannuationTrust (REST), three areas ofcurrent superannuation leg-islation stand out for theircomplexity – but he does notenvision a need to drasticallyoverhaul the SIS Act.
“Certainly AML/CTF hasadded to the complexity ofcompliance,” he says. “Taxa-tion is always very complex aswell, and then the last oneis probably disclosure.
“However, I believe the SISAct is working reasonably inits current form,” Hill continues.“There are of course areas wherethe industry has developed orwill want to develop that needreview, and certainly post-re-tirement is an issue, but I can’t
see a need to throw the wholelot out and start again.”
“There is probably a case tomodernise, but I think Henry[Australia’s Future Tax SystemReview, led by Ken Henry, sec-retary to the Treasury] andCooper will have a reasonableimpact in that direction.”
Maintaining what seems tobe a common view throughoutthe industry, Thurstans saysthat given multiple super sec-tors and a choice environ-ment, there is room for sig-nificant SIS improvement.
“The super industry has sig-nificantly changed, even fromwhere it was 10 years ago,” shesays. “There are fewer funds andbigger funds, but while therehave been a number of oper-ating standards imposed fromSIS and we’ve seen updates, ithasn’t been looked at in its en-tirety since it was originallybrought in.”
Thurstans points to the
SUPERREVIEW * APRIL 2010
20 COMPLIANCE www.superreview.com.au
A strong regulatory environment and
strict compliance may have seen the
Australian super industry survive the
GFC but, as DAMON TAYLOR reports,
a rapidly changing environment
means major challenges remain.
Dealing with change
SRAPR_10.PG020.pdf Page 20 31/3/10, 3:08 PM
specification of in-house as-sets as a perfect example ofhow unwieldy the SIS Actcould become.
“That’s a real dog part of thelegislation,” she says. “It makesit very hard to maintain ongoingreporting and compliance, andI don’t think it’s looking at whatthe key risk is.
“There could be a lot ofwork done on SIS and it’s apity that when the new op-erating standards came in, ex-isting legislation wasn’tlooked at to see what could betaken out or modified,” con-tinues Thurstans. “I don’tknow that we need a completerewrite, but it could stand tobe reviewed on the basis ofwhere the industry is nowplaced and what its majorrisks are. There will certainlybe a legislative flow-on effectif, as Cooper has suggested,we see a change to the shapeof the entire super system.”
COSTSWhile unnecessary com-
plexity is undesirable, it isalso true that such complexi-ty comes at a cost. Obviouslythat cost, and the cost of com-pliance in general, has to beborne by members at somepoint and in some form.
“The [super] disclosureregime accounts for a significantportion of compliance costs,”Thurstans says. “But it’s not justinternal compliance on this doc-umentation, it’s also external.
“Being very conscious of theregulator, a lot of super fundsoutsource compliance auditsand document checks – it canbe a very expensive proposition,”Thurstans continues. “But withso much frequent change aswell, a super fund is lucky if ithas a PDS [Product DisclosureStatement] that can last a 12-month period in the first place.”
Providing an example of suchchange, Thurstans points to leg-islative amendments concern-ing temporary residents.
“That change had to be put inPDSs, but realistically, howmany people was it going to af-fect? Surely a different approachcould have been taken,”Thurstans says. “A large com-ponent of compliance cost is onthe disclosure side and it’s notrestricted to PDSs – there arealso benefits statements, thewebsite and so on.
“They’re more cost effectiveto change but there’s still workto be done on the back-officeside,” she continues. “And thenyou can add to that the dif-ferent licences we’ve neededover the past few years: FSR,Safety in Super [Superannu-ation Safety Amendment Act2004], etcetera. As a superfund executive, we reallyhaven’t had long periods oftime where we’ve been allowedto just get on with it.”
For his part, Hill also admitsthat overall disclosure require-ments are one of the larger costs
involved in super compliance. “In the case of PDSs, we’re
trying to protect members butif they’re not reading it, thequestion is whether we’remissing the point,” he says. “Ithink we’ve been seeingmoves towards shorter PDSs,and I think that is definitelya step in the right direction.The focus has to be on hittingthe key points rather thandeath by a thousand pages.”
Alternatively, Vamos’ focus forcompliance costs is less on dis-closure and more about adviceand overall efficiency.
“PDS requirements havebeen in place for quite sometime so I think that’s prettymuch business as usual,” shesays. “But there are clearlysome issues around the cur-rent advice regime and thegrey areas that exist betweengeneral advice and personaladvice. They were somewhat
cleared up by RG200 [ASICRegulatory Guide 200], butthe issues seem to continue.”
According to Vamos, thelargest issues faced by thesuper industry with respect tocompliance are related to efficiency.
“And I think that’s whatsuper legislation is set to movetowards,” she says. “We’re look-ing for legislation that lowerscosts through things like thetax file number and employershaving to provide a minimumlevel of data to funds. It won’tbe a move towards more
complex legislation butrather towards the adoptionof electronic standards.”
But while compliance changeand the cost that comes withit has been a superannuation re-ality to date, there is the ques-tion of whether a cost/benefitanalysis has taken place beforethat change is carried out. Afterall, the last thing the super in-dustry wants is legislation thatis priced higher than it is worth.
And encouragingly, Vamossays that she can see both theGovernment and individual reg-ulators gaining a better under-standing of the need for thatanalysis to take place.
“The impact assessments con-ducted on the back of legislativechange have improved a greatdeal through the last few years,”she says. “And it’s an auditedprocess, so I think there’sgreater scrutiny there thanthere may have been in the past.
“With a lot of compliance,super funds get no choice – theyjust have to do it,” Vamos con-tinues. “The discretion comes inon the fund’s controls and in-frastructure to monitor whetheror not they are compliant, for ex-ample whether the advice beingdelivered to a member is per-sonal or whether it comes underRG 200. The question to be con-templated is the cost of thatcompliance, and it needs to betaken into account within anybusiness development plan.”
Thurstans suggests that thecost/benefit analysis for legisla-tive change is something thatthe Government and superan-nuation’s regulators can handlebetter.
“I haven’t really seen thatanalysis taking place withinCooper, for instance,” she says.“The new super structure beingproposed seems to have no realconsideration for cost – it’s as ifit hasn’t been factored in.
“Other reforms have askedthat question,” Thurstans con-tinues. “But it’s an area that can
be quite hard to quantify. Youdon’t always know what the im-pact of legislative change will beuntil you’re in the thick of it andthen you’ve got the cost of newpersonnel, new software and soon. That’s something I believethe Cooper Review needs to bevery mindful of.”
Another point about compli-ance to have come out of theCooper Review is whether a sin-gle regulator will better serveAustralia’s super industry – asopposed to what has beendubbed the ‘twin peaks’ model.The argument is that the two-pronged regulation approachhas seen the super industrythrough a severe financial cri-sis – but for Thurstans, it isn’tquite so simple.
“For a start, I’d argue that cur-rent super regulation isn’t a ‘twinpeak’ model at all,” she says.“Yes, there’s ASIC [the Aus-tralian Securities and Invest-ments Commission] and APRA[the Australian Prudential Reg-ulation Authority] but there’salso the ATO [Australian Tax-ation Office], AUSTRAC [theAustralian Transaction Reportsand Analysis Centre] and thePrivac Commissioner as well.”
“It’s more like five regulatorsand counting, and the mainproblem we have is that our reg-ulators don’t talk to each othervery well.”
Thurstans continues by say-ing that the industry can do a lotworse than developing a forumwhere regulators talk to eachother and the wider super in-dustry more effectively.
“But that isn’t to say that I’min favour of having a single reg-ulator,” she adds. “As thingsstand, the legislation is set upfor a multi-regulator system –but there continue to be certainissues that leave a lot partieswithin the super industryscratching their heads. So let’smake sure that we have good
www.superreview.com.au COMPLIANCE 21
APRIL 2010 * SUPERREVIEW
Continued on page 22 ☞
Pauline Vamos
SRAPR_10.PG021.pdf Page 21 31/3/10, 3:09 PM
communications between reg-ulators and a consolidated frontin the industry.”
Hill says that he can also seeboth sides of the single versusmulti-regulator argument.
“I think it’s probably alwayspreferable to have one regula-tor in the interest of reducingboth communication difficultiesand inefficiencies in reporting,”he says. “But given how Aus-tralia has handled the GFC, andgiven that there have been nofailures within the super in-dustry, I think it more than like-ly that the current regulationmodel will continue.”
From Vamos’ perspective, themost significant issue with amulti-regulator model is in whatlies in the grey areas betweenregulators’ responsibilities.
“The biggest gap is this,”she says. “With multiple reg-ulators there will always bea risk of things falling be-tween the cracks.”
Illustrating her point, Vamossays that there are currently twoareas of the current regulationmodel where regulator respon-sibility remains unclear.
“The first is in downstreaminvestment by super funds,”she says. “And while APRAmay look at the controls inplace, there’s no obligation oneither party to follow thatmoney all the way down.
“The second needing claritylies in early release and iden-tity fraud,” Vamos continues.“The industry has four regula-tors in that area and yet therecontinues to be a lack of abili-ty to prosecute the people ac-tually committing that offence.”
Vamos says that duplicatedreporting requirements are alsoa concern underneath a multi-regulator model.
“In the past the issues havebeen within breach reportingbut they’ve been somewhat re-solved,” she says. “However, therisk is that if a fund has a unit
pricing breach and must informboth regulators, both look at itfrom different perspectives.
“Super funds then have toplease regulators looking atthings from two different anglesand it can mean double the re-sources and double the cost,”Vamos adds. “And if a fund hasfour managers or executivesspending three hours with oneregulator and three hours withanother, there’s unproductivetime there. It all comes at a cost,but the first step here has tobe looking to fill these gaps.”
INDUSTRY CONSULTATIONRelated in many ways to
whether a cost/benefit analy-sis should being undertaken be-fore any legislation change takesplace is the issue of industryconsultation. If the currentCooper Review and its numer-ous submissions are any indi-
cation, then ostensibly thisseems something already inplace and yet, according toVamos, the industry perspectiveis somewhat different.
“The biggest issue here is tim-ing,” she says. “While there iscertainly consultation, it’s mean-ingless if the industry isn’t giventime to respond in an orderlyand informed way.
“In the case of Cooper, we’retalking about three differentphases, hundreds of questionsand a very short lead time for in-dustry response,” Vamos con-tinues. “But these are complexissues, so giving informed feed-
back within such a short time-frame has been far from easy.”
Echoing Vamos’ thoughts,Thurstans says that industryconsultation, or rather thetiming of that consultation,is something that can defi-nitely be improved.
“Reviews of this nature seemto have a really bad habit of re-leasing things towards the endof the year,” she says. “So I’d askthem to look at when they’re re-leasing and at how much timethey’re giving the industry to di-gest and give back meaningfulcommentary.
“The answer here is probablyquite simple – just don’t releaseanything in December. It’s justa bad time of year.”
Taking a different tack, Hillsays that while the Cooper Re-view has an ambitioustimetable, it should be re-membered that it remains asystem review.
“The process still requires aGovernment response and I ex-pect further consultation willtake place when that happens,”Hill says. “That’s the point atwhich it will be important forthe industry to engage and thefocus will be on ensuring thatany regulatory change that doescome through does so by pro-viding benefits to members.”
Of course, in the midst of somany significant reviews relat-
ing to superannuation, thereis a concern that proposed leg-islative and compliance changecan be reactive rather thanmeasured. Demonstrating thepoint, a recent submission to theCooper Review by SunCorp Lifewarns against reacting to a ‘mo-ment in time’ with respect to theGFC and increasing legislativecomplexity. But for Vamos, suchconcerns are unfounded.
“To be honest, I don’t thinkthat is what’s happening here,”she says. “The industry ac-knowledges that it currently hasa number of regulatory road-blocks and inefficiencies.
“In the past several years theindustry has grown and ma-tured, its membership has di-versified and account balanceshave increased,” Vamos con-tinues. “So with that in mind, it’snot surprising that there’s aneed to review superannuation’slegislative framework. Quite thecontrary, I think it’s timely.”
Similarly, Thurstans says thatthe broad outline of the CooperReview does not seem to be anysort of reaction to the GFC.
“I don’t think Cooper isdoing that,” she says. “TheSafety in Super reforms wereprobably a reaction to largerfund issues, but Cooper is look-ing at efficiencies within thesuper industry. It’s not reallylooking at investment practices
or risks and, on that basis, Ithink any outcomes will bemeasured and not knee jerk.”
By contrast, Hill says thatwhile there are certainly lessonsto be learned as a result of theGFC, they are lessons that won’tbe immediately apparent.
“They’re lessons that may takesome time to understand,” hesays. “And yes, there is alwaysa risk of knee-jerk reactions butthat goes far beyond the regu-latory environment.
“It’s not unusual for regula-tory compliance to swing fromtoo easy to too harsh,” adds Hill.“And while that may not happen,while Australia has comethrough the GFC well with re-spect to regulation, I can’t seethe industry being immune tosome change.”
The focus of Australia’s superindustry seems firmly fixed onrecovery. But with the outcomesof Cooper and Henry still pend-ing, change is in the wind, butaccording to Vamos, the broadcompliance issues being dis-cussed are the right ones.
“The broad issues have cer-tainly been raised,” she says.“But what’s important now isgetting them resolved.”
Thurstans says that while thefuture of compliance is still ahuge unknown, she is preparedfor interesting times ahead.
“It’s a little bit hard to saywhere we are right now [withrespect to the Cooper Re-view],” she says. “It’s still a bitof an unknown in terms ofwhere the review is going toend up but certainly, if thestructural changes being pro-posed come through, thecompliance implications arehuge.
“The beauty of compliance isthat there will always be some-thing,” Thurstans continues. “Ifyou like change, compliance andrisk management is the place tobe because it will always be in-teresting to see how that changecan be navigated in the bestinterests of members.” SR
SUPERREVIEW * APRIL 2010
22 COMPLIANCE www.superreview.com.au
☞ Continued from page 21
Dealing with change
Damian Hill
SRAPR_10.PG022.pdf Page 22 31/3/10, 3:10 PM
www.superreview.com.au APPOINTMENTS 23
APRIL 2010 * SUPERREVIEW
Australian Unity Invest-ments (AUI) has appointedLeonie Pratt as its chief op-erating officer.
Pratt has more than 20years of experience in the fi-nancial services industry,having worked in various in-vestment, accounting andportfolio roles at StateStreet, Westpac FinancialServices and Rothschild.
She has come to AUI fromIntech Investment Consul-tants, where she was head ofinstitutional client services.
Head of AUI David Bryantsaid Pratt’s strategic planningskills, focus on delivering re-sults and leadership abilitiesare well known to the AUIteam.
“Her experience in insti-tutional client develop-ment, investment opera-tions support, and Asianbusiness developmentmakes her particularly well-suited for her role at AUI,”he said.
Perpetual Investments has ap-pointed Paul Skamvougerasto manage its long/short fund,Share Plus, and RosemaryTan as an equities analystwith the Australian equitiesfundamental asset manage-ment team.
Skamvougeras has over 14years of experience in theindustry, joining Perpetualfrom CPH/Ellerston Capi-tal where he managed along/short global equityportfolio.
Commenting on Skamvoug-eras’ appointment, CathyDoyle, group executive ofPerpetual Investments busi-ness services and chief oper-ating officer of Australian eq-uities, said: “He has anin-depth understanding ofthe disciplines around thestock shorting process, skillsin investing and tradingacross various asset classesand a strong understandingof Perpetual’s culture and in-vestment philosophy.”
Tan joins Perpetual fromPlatinum Asset Manage-ment where she worked as anequities analyst for the Plat-inum Asia Fund. She has alsoworked for MMC Asset Man-agement, the Reserve Bankof Australia and the Aus-tralian Prudential Regula-tion Authority.
Tan’s role will be to focuson the range of small capstocks and internationalstocks, particularly in Asia.
“We believe her strong an-alytical skills and her flu-ency in Mandarin make her
an invaluable asset to ourteam,” Doyle said.
Vanguard Investments Aus-tralia has named John Jamesas its new managing director.
James is an Australianwho has worked at Van-guard’s US headquarters inPennsylvania since 2008. Heheaded the distribution di-vision for the firm’s financialadvice services group and re-cently began developing anew global line of businessfocused on financial advisersand other intermediaries,with a particular emphasison exchange-traded funds.
Jeremy Duffield has beenacting as managing directorsince November last year.
The group said Duffieldwould now resume his role aschairman of Vanguard Aus-tralia and managing directorof Vanguard InternationalPlanning and Development.
James’ previous Australianfinancial services experienceincludes being general man-ager of corporate distributionwith MLC, with responsibil-ity for the wealth manage-ment arm of National Aus-tralia Bank’s business bank,as well as being a senior ex-ecutive at Rothschild Aus-tralia Asset Management. SR
Mercer has appointedGraeme Mather tothe newly created role
of head of superannuation in-vestments for Australia andNew Zealand.
Commenting on Mather’sappointment, Simon Eagle-ton, business leader of Mer-cer’s investment consulting
business in Australia and NewZealand, said: “We have cre-ated a new position … to en-hance our consulting capa-bility in the areas of definedcontribution investment op-tion and strategy design, andreinforce our capabilities inthe asset-liability manage-ment of defined benefit
schemes.” Mercer has also appointed
several senior associates, in-cluding Jennifer Cowan andRebecca Dixon, who join Mer-cer’s global alternatives re-search boutique and respon-sible investment teams,respectively. Hendrie Kosterwill specialise in investmentstrategy, portfolio constructionand manager selection.
Jo Allen joins the invest-ment operations specialistteam, Mercer Sentinel, tofocus primarily on daily andevent-driven operationalrisk. SR
Mercer’s key appointmentsEvents CalendarSuper Review’s monthly diary of superannuation industry events around Australia and abroad.
AAPPRRIILL
AAUUSSTTRRAALLIIAANN CCAAPPIITTAALL TTEERRRRIITTOORRYY8 – ASFA Roadshow 2010: Cut through the white noise. Venue: Pavilion onNorthbourne. 242 Northbourne Avenue, Canberra. Enquiries: ASFA MemberServices Unit. Ph: (02) 9264 9300 or 1800 812 798.
TTAASSMMAANNIIAA13 – ASFA Roadshow 2010: Cut through the white noise. Venue: ChurchillRoom, Salamanca Inn. 10 Gladstone Street, Hobart. Enquiries: ASFA MemberServices Unit. Ph: (02) 9264 9300 or 1800 812 798.
SSOOUUTTHH AAUUSSTTRRAALLIIAA14 – ASFA Roadshow 2010: Cut through the white noise. Venue:Intercontinental Adelaide. North Terrace, Adelaide. Enquiries: ASFAMember Services Unit. Ph: (02) 9264 9300 or 1800 812 798.
QQUUEEEENNSSLLAANNDD15 – ASFA Roadshow 2010: Cut through the white noise. Venue: KennedyRoom, Sebel and Citigate. Cnr Ann and Roma Streets, Brisbane. Enquiries:ASFA Member Services Unit. Ph: (02) 9264 9300 or 1800 812 798.20 – ASFA Luncheon. Online branding – Heroes, villains and thetransfer of power. Speaker: Bruce Stafford, Managing Director, LongshipFinancial Marketing. Venue: Stamford Plaza Brisbane. Cnr of Edward &Margaret Streets, Brisbane. Enquiries: ASFA Member Services Unit. Ph:(02) 9264 9300 or 1800 812 798.
NNEEWW SSOOUUTTHH WWAALLEESS19 – ASFA Roadshow 2010: Cut through the white noise. Venue: WesleyTheatre, Wesley Conference Centre. 220 Pitt Street, Sydney. Enquiries: ASFAMember Services Unit. Ph: (02) 9264 9300 or 1800 812 798.
VVIICCTTOORRIIAA14 – ASFA Luncheon. Adequacy – the best way to get there?Panellists: Scott Donald, Faculty of Law, University of NSW; David Holston,Head of Consulting – Melbourne and Executive Director, JANA InvestmentAdvisers; Kate Wood, Director, AGEST. Venue: Park Hyatt Melbourne. 1Parliament Square off Parliament Place, Melbourne. Enquiries: ASFAMember Services Unit. Ph: (02) 9264 9300 or 1800 812 798.21 – ASFA Roadshow 2010: Cut through the white noise. Venue: ArthurStreeton Auditorium, Sofitel Melbourne on Collins. 25 Collins Street,Melbourne. Enquiries: ASFA Member Services Unit. Ph: (02) 9264 9300 or1800 812 798.
WWEESSTTEERRNN AAUUSSTTRRAALLIIAA20 – ASFA WA Super & Investment Forum. Venue: Hyatt Regency. 99Adelaide Terrace, Perth. Enquiries: ASFA Member Services Unit. Ph: (02)9264 9300 or 1800 812 798.22 – ASFA Roadshow 2010: Cut through the white noise. Venue: TerraceBallroom, Perth Hyatt Regency. 99 Adelaide Terrace, Perth. Enquiries: ASFAMember Services Unit. Ph: (02) 9264 9300 or 1800 812 798.
NNOORRTTHHEERRNN TTEERRRRIITTOORRYY29 – ASFA Roadshow 2010: Cut through the white noise. Venue: AmbassadorRoom, Crowne Plaza Darwin. 32 Mitchell Street, Darwin. Enquiries: ASFAMember Services Unit. Ph: (02) 9264 9300 or 1800 812 798.
Investment consultancy Mercer hascontinued its expansion, announcingseveral appointments for the firstquarter of 2010.
Fax details of conferences, seminars and courses to Super Review on (02) 9422 2822
SRAPR_10.PG023.pdf Page 23 31/3/10, 3:11 PM
ROLLOVER T H E O T H E R S I D E O F S U P E R A N N U A T I O N
Got a funnystory? about people in the superannuation industry?
Send it to Super Review and you couldbe raising a glass or two. Super Review is giving away a bottle ofbubbly for the funniest story published in our next issue.
AFTER attending the 2010 Con-ference of Major Superannua-tion Funds (CMSF), Rolloverfound himself back at Super Re-view headquarters teaching his(very) young colleagues a fewverses of The Red Flag.
His young friends seemedsomewhat unmoved as hechorused:
“Then raise the scarlet stan-dard high!
“Beneath its folds we’ll liveand die.
“Though cowards flinch andtraitors sneer.
“We’ll keep the red flag flyinghere.”
Rollover also gave a rendi-tion of a somewhat less en-lightened version of the so-cialist anthem involvingobtaining the foreman’s job atlast, but he digresses.
So what prompted Rollover’sflashback, you ask?
Simple! The CMSF openingaddress given by the AustralianWorkers’ Union national sec-retary, Paul Howes – a manwhose references to “shysters”and other assorted enemies ofthe working classes was a re-minder of times past.
Rollover assumes that thefeet shuffling he heard duringHowes’ address was the soundof assorted fund managers feel-ing uncomfortable. SR
Flyingthe flag
Back to his roots
SUPERREVIEW * APRIL 2010
StretchingcredibilityROLLOVER now has proofthat both good and bad cancome from a global financialcrisis (GFC).
That proof came in theform of an announcement inlate March that the reces-sionary environment creat-ed by the GFC had hastenedas much as 10 years’ worthof change in the legal pro-fession as solicitors, barris-ters and silks strive to re-main competitive.
According to the research,commissioned by an inter-national law firm, the GFCcaused lawyers to focus onefficiency, what their clientswant and the delivery ofvalue for the fees theycharge.
This is all revolutionarystuff and Rollover mighthave been persuaded to alterhis generally negative viewof lawyers and the legal pro-fession were it not for thesuggestion in the report thatthe client now held the
power in “the legal supply relationship”.
It seems to Rollover thatthe mere suggestion that aclient may be able to controlwhat their lawyer ultimate-ly charges is stretching thelegal definition of the word‘credible’.
Rollover prefers to thinkof lawyers as being a speciesnot dissimilar to cockroach-es – highly adaptable and ca-pable of surviving a nuclearholocaust. SR
AS a former colleague, Rollover offershis congratulations to Gerard Noonanon his elevation to the chair of the
Australian Institute of Superannua-tion Trustees.
Noonan and Rollover both hackedaway at the Australian Financial
Review in the early 1980s andwhile Rollover is still hack-
ing, Noonan is these daysdeeply involved in su-
perannuation as the chairof Media Super and now the
AIST.And if anyone should have
an intimate knowledge of the
antecedents of the current Australiansuperannuation regime it should beNoonan who, as a Melbourne-based in-dustrial relations writer, covered theemergence of the Prices and IncomesAccord between the Hawke LaborGovernment and the Australian Coun-cil of Trade Unions. That Accord, ofcourse, gave birth to the superan-nuation guarantee.
The superannuation guarantee hasbeen such a success that it has givenrise to many fathers, but Rollover cansay with certainty that both he andNoonan were witnesses to its birth. SR
IT would not have been theConference of Major Super-annuation Funds without theCMSF charity golf day, thisyear held at the North Lakescourse on the northern out-skirts of Brisbane.
As is usually the case, theorganisers of the CMSF golfday offered a range of prizes,from ‘best score’ to ‘longestdrive’ and ‘nearest the pin’.However, reflecting the su-perannuation industry’s em-brace of environmental sus-tainability, they also offeredprizes to those players puttingmost balls in the water andthe trees.
Rollover found himself play-ing with a couple of chaps
from Legg Mason, and whilehe was deeply impressed withthe ability of Phil Hart to un-erringly hit his ball straight upthe fairway, one of Phil’s vis-iting US colleagues provedto be a little less accurate.
So frequently did the manfrom Legg Mason find wateroff the tee, that Rollover en-quired whether he came froma family of water diviners.With somewhere aroundseven or eight balls at the bot-tom of ponds, lakes andstreams, the man seemed acertainty to win the CMSFwater conservation prize.
Alas, it was not to be. Some-one who managed to find thewater 14 times won the prize. SR
