Cooper welcomes govt super adoption

The chair of the superannuation system review has welcomed the federal government's
decision to adopt its recommendation for a low-fee default superannuation account.
Jeremy Cooper said the move would help shift Australia's superannuation culture from
one focused on receiving a lump sum upon retirement to receiving an appropriate
income stream in retirement.
The federal government will also adopt the review's recommendation to modernise
"back office" administration to make it easier to locate lost accounts and make
transactions more efficient.
Mr Cooper said he was pleased the government would adopt the two core planks of the
year-long review into the $1.3 trillion superannuation system, barely one month
after the review was released.
"The two big ideas are really going to put food on the table for members," Mr Cooper
told reporters at a Finsia conference in Melbourne on Tuesday.
Mr Cooper was responding to the government's announcement on Sunday that if
re-elected,it would legislate to have low-fee default superannuation accounts, known
as MySuper, to begin in July 2013.
The government would insist that MySuper providers not charge entry fees, that they
limit exist fees to cost recovery, and there would be a ban on commissions,
Treasurer Wayne Swan said on Sunday.
The coalition has yet to respond to the Cooper review recommendations.
On Tuesday Mr Cooper said he had not briefed the coalition.
"They haven't asked me," he said.
Adopting MySuper would help shift Australia's superannuation culture to one focused
on retirement income streams, he said.
"At the moment our system is ... built around the accumulation of a pot of money.
It's a very long way off and often expressed in tomorrow's dollars.
"Most workers live on an income, not a lump sum.
"We're saying on a very regular basis people need to be told about (the) replacement
rate - what rate of income replacement do I want to get in retirement?"
He said high income earners n their 50s also need to be wary of heavy credit
consumption undertaken on the basis that their superannuation nest egg would be
available to offset their debt.
The median superannuation balance for account holders aged between 55 and 64 years
is currently $72,000, he said.
Mr Cooper said fees on account-based pensions average 180 basis points and are "far
too high for what they are", largely because the market was retail focused.
Separately, consumer advocate CHOICE on Tuesday said a survey of 1,400 retail
superannuation fund investors revealed that 23 per cent were thinking of switching
to other superannuation options.
This compared to nine per cent for corporate fund clients, seven per cent of
industry fund respondents and four per cent of those in public sector funds.