The then Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry, announced the Super System Review (Review) on 29 May 2009. The Review was initiated with the support of the superannuation industry. The terms of reference are as follows:
Review into the governance, efficiency, structure and operation of Australia’s superannuation system
- The Review will comprehensively examine and analyse the governance, efficiency, structure and operation of Australia’s superannuation system, including both compulsory and voluntary aspects, addressing, but not limited to, the following issues:
1.1 Governance: examining the legal and regulatory framework of the superannuation system, including issues of trustee knowledge, skills and training; and thoroughly assess the risks involved in the use of debt and leverage and the development of investment options that lead to a weakening of the diversification principle in the superannuation system;
1.2 Efficiency: ensuring the most efficient operation of the superannuation system for all members, whether active or passive members and whether making compulsory or voluntary contributions, including removing unnecessary complexities from the system and ensuring, in light of its compulsory nature, that it operates in the most cost effective manner and in the best interests of members;
1.3 Structure: promoting effective competition in the superannuation system that leads to downward pressure on system costs, examining current add-on features of the superannuation system; and, examining other structural legacy features of the system; and
1.4 Operation: maximising returns to members, including through minimising costs, covering both passive defaulting members, who should receive maximum returns and value for money through soundly regulated default products, and active selecting members, who should not be negatively impacted by conflicts of interest that may inhibit advice being in the best interests of members.
- The Review to be conducted around the concepts of the best interests of the member and the maximising of retirement incomes for Australians.
- The Review to be conducted with reference to improving the regulation of the superannuation system, whilst also reducing business costs within the system.
- The Review will be a systemic examination, including all superannuation fund sectors.
- In conducting its work, and in determining its recommendations, the Review will have regard to the Communiqué of Principles (see separate attachment to this release).
- The Review will comparatively examine international jurisdictions and will consult with experts as needed from other jurisdictions.
- The Review is excluded from considering the issues before the Australia’s Future Tax System review concerning system inputs such as the level of superannuation contributions, taxation including taxation concessions and other incentives.
- The Review is excluded from considering the development of a superannuation clearing house or the project addressing the consolidation of lost accounts, as these are the subject of separate and already commenced processes.
Composition and Consultation
- The Review to be led by an expert panel made up of a full-time Chair and five part-time members, supported by a secretariat drawing on the skills of the key policy and regulatory agencies of the Commonwealth, as well as market expertise. The Review may also draw on external expertise where necessary.
- The Review will consult the superannuation industry, other stakeholders and the broader public.
- The Review will make recommendations to the Government by 30 June 2010 on possible options for reform, including appropriate transitional arrangements. The Review may report on particular issues prior to the finalisation of the final report.