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Mallesons Stephen Jaques
Who does this affect?

Superannuation trustees and service providers.

What do you need to do?

Review first issues paper (Governance) and make a submission by 16 October 2009.

Author
Michael Mathieson  
Senior Associate
Michelle Levy  
Partner
T +61 2 9296 2437
John Edstein  
Partner
T +61 2 9296 2129

Sydney
Jim Boynton  
Mark McFarlane  

Melbourne
John Malon  

Canberra
Stephen Jaggers  

Cooper Review: phased consultation begins - 25 August 2009

The Super System Review headed by Jeremy Cooper has today announced that its examination of Australia’s superannuation system will be conducted in three phases. The Review Panel has also called for submissions in response to the Phase One: Governance - Issues Paper also released today.

Phases, timetable and issues

The Review will be divided into three phases of consultation:

  • Phase One - Governance
  • Phase Two - Operation and Efficiency
  • Phase Three - Structure (including SMSFs)

Each phase will be treated as a separate consultation giving stakeholders time to work through the multitude of key issues.

Phase

Dates

Anticipated topics

1. Governance

25 Aug 2009 - issues paper

16 Oct 2009 - submissions close

Early Dec 2009 - initial recommendations

Trustee knowledge, skills, training

Trustee duties

Trustee performance

Outsourcing

Government policies

Investment options

Accountability to members

Best practice

APRA and ASIC regulation

2. Operation & efficiency

16 Oct 2009 - issues paper

14 Dec 2009 - submissions close

Mar-Apr 2010 - initial recommendations

Fees and charges

Comparability

Defaults

Technology

Competition

Administrators

Complexity

3. Structure

14 Dec 2009 - issues paper

19 Feb 2010 - submissions close

Apr-May 2010 - initial recommendations

SMSFs

Super fund sectors

Funds management model

Defined benefit funds

Embedded insurance

Super in post-retirement phase

Taxation arrangements, preservation ages, contribution rates, longevity risk, lost member accounts and clearing house facilities are outside the scope of the Review.

Some key questions raised by the Phase One: Governance - Issues Paper

  • Is the trust model for super still appropriate?
  • Should general law duties to avoid conflicts of interest be codified?
  • Would provisions enabling trustees to override deeds that require investments or outsourcing within a corporate group help reduce conflicts?
  • Should trustees be members so their interests are more fully aligned, or should they not have a personal interest in the fund?
  • Has outsourcing gone too far and are conflicts in outsourcing to associated service providers adequately managed?
  • Should securities lending be specifically regulated?
  • Should consolidation of smaller funds be required in the pursuit of economies of scale?
  • Should Government use the superannuation system to advance other policy objectives such as sustainability, corporate social responsibility and managing climate change?
  • Should APRA regulation, and sanctions and enforcement powers, be enhanced, and related party transactions regulated?
  • Should the Government impose restrictions to enforce more diversification to asset classes other than equities, and should portfolio rebalancing be required?
  • Are the current exceptions to the borrowing prohibition suitable?

Other

The closing date for submissions on the Phase One: Governance - Issues Paper is 16 October 2009.

The scoping paper and the Phase One: Governance - Issues Paper are available here.

This publication is only a general outline. It is not legal advice. You should seek professional advice before taking any action based on its contents.