The latest Cooper Review Preliminary Report, ‘MySuper Optimising Australian Superannuation’ has just been released giving the clearest indication to date on the likely content of the final recommendations due June 30.
‘MySuper’ is the name for the universal fund concept proposed in the report, being a product with a single, diversified investment strategy designed to cater to Australians who would prefer to delegate the task of designing and maintaining an investment strategy for their super to someone else.
Similar to current ‘default’ investment options, the ‘MySuper’ product would focus on optimising investment returns and reducing overall costs.
Review Chair, Jeremy Cooper, said: “MySuper would be a simple, cost-effective product that redefines what Australians should be able to expect from their super in the twenty-first century.”
Some of the proposed features of ‘MySuper’ include:
- A ban on trailing commissions;
- No contribution fees;
- Requirement to renew advice arrangements every 12 months.
- A new duty on trustees to manage the overall cost to members;
- A default post-retirement product;
- Trustee duties focused entirely on looking after the member.
- Mandatory Trustee requirement to participate in annual benchmarking surveys relating to MySuper offering.
- Member annual statements required to show projected likely income at retirement.
- A separate ‘MySuper’ APRA licence would be required
- Codification (including hard and soft principles)of trustee duties in relation to operating a MySuper portfolio including separate audited accounts relating to the costs of running the portfolio, member services and other costs such as marketing and sponsorship.
The Panel emphasises that, if the ‘MySuper’ proposals were implemented, those Australians who elect to have a fund that offers more choices and options, or want to manage their own super in a self-managed super fund (SMSF), would be entirely free to do so. ‘MySuper’ would be just one offering in the super landscape. However, it is probable that a number of ‘MySuper’ features – such as the trailing commission ban – will also be recommended to apply across the board.
The Proposal can be viewed at www.supersystemreview.gov.au