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SuperStream savings estimates are 'wild'
The projected cost savings from the implementation of SuperStream are “quite wild”, while a lack of data standards will be the biggest barrier to a fully electronic system, according to Australian Administration Services chief executive John McMurtrie.
“When I look at some of those cost savings, Treasury thought there would be $1.7 billion in annual savings as against APRA’s [the Australian Prudential Regulation Authority’s] estimates of $3.5 billion, so 50 per cent cost reductions — I think somebody’s been dreaming,” McMurtrie said at the Association of Superannuation Funds of Australia (ASFA) lunch in Sydney.
“I don’t see anywhere near the cost reductions implicit in SuperStream and MySuper.”
In the short term, the costs of SuperStream are actually going to go north, he said.
“There’s a gathering feeling that a combination of SuperStream and MySuper, there are these silly numbers floating round in the ether. There will be a major investment in getting SuperStream to where [the Cooper Review] wants to take it and the administrators are going to have to meet those sorts of costs.”
Although electronic channels have been gaining traction, cheque volumes have continued to increase, McMurtrie noted.
“Small employers in particular are probably more inclined to write three or four cheques rather than go to three or four separate websites for electronic contributions,” he said.
The lack of data standards has been the biggest impediment to an improvement in back-office systems, with 60 per cent of employee contributions still being submitted on non standard forms, which require manual data entry, he said. An improvement in data standard requirements would be the single biggest factor in bringing an end to the paper trail of super fund back-offices, he added.
The real step forward lies in the adoption of tax file numbers in super fund administration, particularly in the rollover space, McMurtrie said.
AUTHOR
Mike Taylor
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