Electronic super could save $1bn

Superannuation reviewer Jeremy Cooper says improving the administration of superannuation funds could save members close to a billion dollars per year.

The Cooper Review, which was released earlier in July, made two recommendations to simplify the system.

MySuper would replace the default fund option for about 80 per cent of workers who prefer someone else to make their superannuation choices, while SuperStream aims to clean up the back room of superannuation funds via a wider use of electronic records to force down costs.

The review highlighted a lack of clear industry standards and a reliance on error-prone manual filing processes to catalogue information.

Cooper told the ABC's Inside Business program it costs the superannuation industry about $3 billion to $3.5 billion a year to administer the current system.

He said SuperStream would cover one quarter to one third of that administration.

"So you get somewhere around about a billion dollars if that can be taken totally electronic — no human intervention — you'd save around a billion dollars a year."

Cooper acknowledged that some of the savings would end up in the hands of intermediaries or "administrators who had been forced to do their work for an unacceptably low profit margin".

"Some of it will leak but the large proportion of it will go to members," he said.

The Cooper Review called for a broad e-super overhaul with recommendations including the provision of a unique SuperStream identifier based on an individual's tax file number.

The report also called for the implementation of a web portal where super fund members could check on accounts that their tax file identifier number had been associated with.

For more information on the Cooper Review, tune into BTalk's "Superannuation reforms explained" podcast.