A survey by the Association of Superannuation Funds of Australia (ASFA) and Ernst $ Young has found that 38 percent of industry executives surveyed are taking active steps to take advantage of the Stronger Super reform, compared to 26% taking a pure compliance position to the reform.

 

The survey, conducted to assess industry progress in preparing to implement the Stronger Super reforms was completed by 34 industry executives from across Australia and included representation from industry, retail and corporate funds as well as SMSF administrators, public sector, service providers and fund administrators.

 

The report warned that “Stronger Super preparedness is vital for future-proofing the financial services industry. Failure to prepare and deliver could damage industry image and member confidence.”

 

Other key findings of the survey include:

  • Over two-thirds of executives expect to lose less than 10% of their members due to account consolidation. Given the large number of excess accounts, it is likely that some funds will see a higher than 10% loss of members. It appears that the downside implications of consolidation may be underestimated.
  • While the previous survey saw SuperStream accounting for most of the cost incurred; this survey saw it level with MySuper, with each attracting just under 40% of respondent’s estimated cost. This is a fundamental shift in thinking from earlier this year, when the industry saw MySuper as “just another product”.
  • Executives estimate technology and infrastructure to make up 35% of all cost incurred, followed by 26% for business processes and people changes.

The report found that while  industry preparedness had increased considerably over the last six months, many organisations still need to analyse the strategic and operational implications of the coming reforms and prepare their response.

 

It warned that  “players employing a wait and see approach, may be making a terminal mistake. Without a robust understanding of key implications now, industry stakeholders will not have sufficient time to prepare.”

 

“Detailed regulation does not yet exist. However, many leading superannuation funds, administrators and distributors are already examining strategies to protect their existing business and explore new growth opportunities. Using the time now to analyse strategic and operational reform implications is enabling these organisations to prepare a systematic response – with the potential to create substantial competitive advantage.

 

“Despite the inevitable short-term pain, those who embrace the changing landscape of superannuation, and are astute in managing its complexities, will reap the rewards. Delaying action is a false economy, which will damage relationships with stakeholders and members.”

 

The survey report is available here.