Home' Superfunds : Superfunds May 2016 Contents Superfunds May 2016
Total operating expenses increased by around
15 per cent, and when you compare inflation at
3 per cent over the same period, people may argue
that the industry is not improving in efficiency.
This is a dangerous conclusion, as the savings
on areas such as administration have been used
to improve product design and member features.
But importantly, this highlights that we need to be
very careful how we measure efficiency, hence the
measures we have put forward to the Productivity
Commission go beyond blunt measures.
An important part of efficiency is administration
costs, which take up about 25 per cent of
operating costs, followed closely by technology
at 21 per cent. We know that technology is a
key enabler of administration, and the key
enabler of employers and members having a
seamless and convenient experience with a fund
and the industry.
Slowly but surely it seems that investment in
SuperStream is starting to provide dividends, but
we are very much still on a journey. Data quality
is still an issue, many smaller employers are
nowhere near using the new data standards, and
the project to fully implement the superannuation
transaction network (STN) has a long way to go.
Where are we up to on SuperStream? Over
the years, I have used this page many times
to encourage industry leaders to engage with
SuperStream implementation, the inter-operability
of the network and the governance of gateways.
I am going to have one last try!
You need to know we are at a critical time.
The transition of the Affiliation of Superannuation
Practitioners (ASP) into ASFA was very timely
and over the next 12 months those services will
continue to be paid for by ASP members—this is
not the time to increase implementation risk.
Up until now, SuperStream and the creation
of the STN has concentrated on employer to
fund transactions through gateways, clearing
houses and administrators—inter-operability. The
next stage of the project connects the ATO into
the STN. The catchy title for this project is MIG
V2. In essence, this means that the industry will
connect with the ATO. The timing is crucial as is
transparency of readiness. The two parts, ATO
and the industry STN, must be able to assess
when each is ready to make the connection.
Easier said than done, hence we have urged
the ATO to ensure there is an agreed change
management plan with the industry and there
is implementation oversight and governance at
the highest levels. If we do not have these three
elements, we will have uncertainty, cost blow out
and increased risk.
The risk for us is that the first projects are
still incomplete. There is a rather long list of
implementation issues that are being managed
through the ASP processes. There is also a list of
policy issues, which are being managed with the
ATO and Treasury through the ASFA policy team.
In relation to the Gateway Network Governance
Body or the GNGB, both Tim Buskens and I have
been closely involved and we are pleased to see
progress, particularly with the appointment of the
executive officer to the GNGB. We are still not sure
whether we will make the 1 July handover, as there
are still some longer term funding issues, but the
ATO has stumped up $2 million to get the body
started and funded it for the first two years. After
this, superannuation funds will be the primary
funder via a mechanism yet to be determined.
I have made no secret of my personal view that
the GNGB should eventually govern the whole
of the STN. If it does not, there will be one body
overseeing the gateway piece of the STN and
multiple bodies looking after the rest. This is the
height of inefficiency; and by any measure it is not
good for funds or members. The STN has nothing
to do with competition but it has everything to
do with efficiency and risk management including
cybercrime and managing emerging changes like
‘single touch payroll’ and the banking industry’s
‘new payment platform’.
We have urged the ATO to ensure there is an agreed
change management plan with the industry and there is
implementation oversight and governance at the highest levels
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