Cooper Review Final Report

CLIENT UPDATE 5 July 2010

Cooper Review Final Report Today the Government released the Super System Review Final Report (Report), the culmination of the Super System Review. The Report supersedes the preliminary reports and is in two parts: Super System Review Final Report - Part One: Overview and recommendations. This includes a summary of the Review highlights (including the key proposals MySuper and SuperStream, the new ‘choice architecture’, the expansion of APRA’s mandate and the new Code of Trustee Governance). Chapter 10 of the Report contains a summary of each of the recommendations in the recommendation packages set out in Part 2 of the Report. Super System Review Final Report - Part Two: recommendation packages. This contains the following 10 recommendation packages: MYSUPER AND CHOICE ARCHITECTURE - including proposals for a new architecture for the superannuation industry, MySuper and duties for MySuper trustees. Note that this will require revisions to SIS to address the different sectors of the choice architecture model. TRUSTEE GOVERNANCE - including proposals for a new office of trustee-director, non-associated trustee-directors, conflicts policies and a Code of Trustee Governance. INVESTMENT GOVERNANCE - including proposals to expand the factors to be considered in developing an investment strategy, a new ‘performance fee standard’, managing investments for after-tax returns and a proxy voting policy. OUTCOMES TRANSPARENCY - including proposals for standardising reporting for performance and costs, ‘dashboard’ style disclosure for risks and returns, costs disclosure, past performance and a Government website for understanding super. INSURANCE IN SUPERANNUATION - including proposals for an insurance management strategy, making trustees responsible for selecting and administering insurance, offering death and TPD on an opt-out basis in MySuper products, banning commissions on insurance in superannuation, and limiting insurance in super to death, TPD and income protection insurance. INTEGRITY OF THE SYSTEM - including the proposals for a risk reserve, licensing by APRA of administrators and commercial clearing houses, requiring trustees to address liquidity risks in the RMP and requiring DB funding to focus on coverage of vested benefits. RETIREMENT - including the proposals to require MySuper trustees to offer a retirement product to MySuper members, to consider longevity and inflation risks when developing investment strategies for post-retirement members and to pro-actively offer advice to members about retirement. SELF MANAGED SUPER SOLUTIONS - including proposals to create a SMSF resource centre, simplifying legislation and trustee requirements, registration and minimum competency and independence standards for approved auditors, installing a flexible penalty regime and improving the SMSF registration process.

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SUPERSTREAM - including proposals for the electronic transmission of linked financial and member data using standardised formats, using TFNs as primary identifiers and aligning pay and contribution cycles. Note that the Government will need to introduce measures to enable the ATO to carry out its new SuperStream functions. REGULATORY SETTINGS - including proposals to expand APRA’s mandate and give it standards-making power in superannuation, improving cooperation between ASIC and APRA and aiding the rationalisation of legacy products. The Government is continuing to review the Report and will work with the industry in considering its response. We will keep you up to date with the Government’s response to the Report. Paul Cleary has considerable expertise in the provision of specialist financial services and would be pleased to offer strategic superannuation legal advice.

For more information, please contact: Paul Cleary Partner T: 02 8257 5760 M: 0407 052 170 paul.cleary@turkslegal.com.au

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