(July-2003) Starting the year with a clean slate

29 September 2005

| By Zilla Efrat |

Welcome to Super Review. We’re starting off the new financial year with a new look. We’ve added some humour and taken on a more newsy format, moving with the times to make the magazine easier to read. We do hope you like it and look forward to hearing your feedback.

Speaking of the new financial year, we asked some super fund executives what they see as their major challenges for the year ahead (see p10). Not surprisingly, almost all listed the introduction of the Financial Services Reform Act (FSRA) as their major challenge. Some are applying for licences, many more will not. Indeed, Mercer believes that only five per cent of its super fund clients will seek a licence under the FSRA (see p8).

We hear that the looming FSRA deadline is forcing many employers to rethink their positions on super, a trend that is keeping tender consultants busy. For example, Rice Walker Actuaries managing director Wayne Walker says his group is currently helping around 14 employers through this process, although not all are likely to fully outsource their super. “The FSRA is just another straw on the camel’s back,” he says.

Financial planners are also jumping in to help employers with their outsourcing decisions, so much so that groups like Skandia are introducing commission oriented corporate super products designed specifically for advisers (see p12).

Of concern, however, are those advisers who are running outsourcing tenders which exclude master trusts like Mercer and Plum because they don’t pay commissions.

But there’s plenty more to keep super fund executives busy and drive employers to tender consultants. The Government still has seven pieces of super legislation and three discussion papers on the agenda. These include choice-of-fund proposals and draft regulations for portability, a move which will allow fund members to move their super between funds without the need for a trigger event such as job change or retirement. At the same time, a new APRA-regulated licensing regime to boost the safety of super is being developed.

The added administrative burden that super funds will have to face, together with an uncertain investment outlook, means that this financial year opens on a cautious footing for trustees. Most, however, will just be too busy putting together member statements and working out how to communicate the news about returns to members to even notice.