Business Response To Cooper Supannuation Review: Lower Fees Not Higher Levy
5 July 2010
The Cooper Review into Superannuation released today provides a solid base to improve the efficiency and transparency of Australia's superannuation system, but should have highlighted the disproportionate burden on business to fund retirement incomes, and that regulation of employer obligations should not be duplicated in both superannuation and industrial relations law.
ACCI's Chief Executive Peter Anderson said,“The report is a timely recognition that business is incurring red tape costs as the middle-man between employees and the superannuation industry. Better value to employees from compulsory employer contributions can be achieved by cutting red tape and superannuation industry fees.”
“The nation’s employers largely fund the billions of dollars that go into superannuation each year, through the compulsory 9% superannuation guarantee levy.”
“Given that the Cooper Review shows that changes to fees and the way the superannuation industry operates can provide higher retirement incomes, there is now a weaker case to force employers to increase the compulsory 9% levy over the next decade," Peter Anderson said.
“The proportion of fees taken by the superannuation industry has not fallen despite a larger critical mass of funds. If fees alone were reduced by less than half, then there would be no need to impose a $20 billion per year levy rise on employers that will weaken the economy.”
“In light of the Cooper Review and on behalf of hundreds of thousands of small businesses, ACCI calls on the government to now put the proposed employer levy increase to one side, and implement the Cooper Review recommendations before deciding whether to raise the 9% levy or adopt the Henry Review's preferred alternative of increasing tax concessions,” Peter Anderson said.
The MySuper default product advocated by the Cooper Review is a worthy concept, though the complexity of dual regulation of employer obligations between superannuation and industrial relations laws will make its implementation tricky and could require some industrial awards, which have just been reviewed, to be re-opened. Superannuation regulation should be carved out from industrial relations awards to simplify compliance.
Proposals to move away from non-electronic payment by employers are understandable but need to be road tested with small business, as do proposed new offences on the transfer of data.
The recommendation that the GEERS scheme cover 3 months of superannuation on insolvency is sensible and should obviate the push for more frequent employer payments, which would put cash-flow stress on small business.