SUPER SYSTEM REVIEW
FINAL REPORT
Part Two
Recommendation Packages

© Commonwealth of Australia 2010
ISBN 978-0-642-74622-1
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Contents
Chapter 1: MySuper and Choice Architecture
KEY THEMES	5
1	A NEW ARCHITECTURE FOR SUPER	5
2	PURPOSE OF MYSUPER	9
3	QUALIFYING AS A MYSUPER PRODUCT	12
4	ADVICE	18
5	INSURANCE	21
6	MOVEMENT OF MYSUPER MEMBERS	23
7	MEMBER ENGAGEMENT	26
8	IMPLEMENTATION	28
9	CHOICE PRODUCTS	30
Chapter 2: Trustee Governance
KEY THEMES	43
1	INTRODUCTION	44
2	A FRAMEWORK FOR ACCOUNTABLE TRUSTEE GOVERNANCE	44
3	STANDARD OF COMPETENCE FOR TRUSTEE‑DIRECTORS	50
4	THE STRUCTURE OF THE BOARD	53
5	ACCOUNTABILITY TO MEMBERS	56
6	MANAGEMENT OF CONFLICTS	59
7	A CODE OF TRUSTEE GOVERNANCE	62
Chapter 3: Investment governance
KEY THEMES	73
1	WHAT IS INVESTMENT GOVERNANCE?	74
2	OVERVIEW OF INVESTMENT STRUCTURES	74
3	OUTSOURCING TO FUND MANAGERS	75
4	REMUNERATION AND INCENTIVE STRUCTURES	77
5	MANAGING FOR AFTER‑TAX RETURNS	84
6	OTHER BARRIERS TO GOOD GOVERNANCE	87
Chapter 4: Outcomes transparency
KEY THEMES	99
1	IMPROVING OUTCOMES TRANSPARENCY	100
2	OUTCOMES REPORTING STANDARDS	101
3	INFORMATION PROVIDED BY SUPER FUNDS	102
4	DEFICIENCIES WITH EXISTING FINANCIAL REPORTING INFORMATION	104
5	STANDARDISING INVESTMENT OPTION INFORMATION	109
6	A NEW APPROACH — A PRODUCT DASHBOARD	113
7	REPORTING TO APRA	120
8	SYSTEMIC TRANSPARENCY	124
9	GOVERNMENT SUPER WEBSITE	129
Chapter 5: Insurance in superannuation
KEY THEMES	141
1	INSURANCE	142
2	UNIQUE EXPENSE	143
3	DEFAULT LEVELS	143
4	TOTAL AND PERMANENT DISABILITY INSURANCE	146
5	INCOME PROTECTION INSURANCE	148
6	COMPETITION IN THE GROUP RISK INSURANCE MARKET	149
7	DISCLOSURE OF INSURANCE OFFERINGS	151
8	INSURANCE AND FINANCIAL ADVICE	152
9	DEATH BENEFIT NOMINATIONS	153
10	SELF‑INSURANCE	155
Chapter 6: Integrity of the system
KEY THEMES	163
1	INTEGRITY OF THE SUPER SYSTEM	164
2	LICENSING OF ADMINISTRATORS	169
3	RISK MANAGEMENT STRATEGIES AND PLANS	172
4	DEFINED BENEFIT FUNDS	176
5	CONTROL OVER INVESTMENTS	180
Chapter 7: Retirement
KEY THEMES	193
1	RETIREMENT	194
2	THE RETIREMENT PHASE	196
3	LIQUIDITY RISK	207
4	MYSUPER AS AN INTEGRATED RETIREMENT PRODUCT	207
5	THE NEED FOR ADVICE IN MANAGING RETIREMENT INCOME	207
6	ENHANCED TRUSTEE ROLE for retirement phase	209
7	COLLECTIVE PENSION SCHEMES	209
Chapter 8: Self‑managed super solutions
KEY THEMES	217
1	INTRODUCTION	218
2	TEN GUIDING PRINCIPLES FOR SMSFS	218
3	THE PANEL’S VISION FOR SMSFS	221
4	STRUCTURE	221
5	SMSF TRUSTEES — EDUCATION AND COMPETENCY	224
6	REGULATION	225
7	SERVICE PROVIDERS	230
8	INVESTMENTS	240
9	SMSF INFORMATION	247
10	IMPROVING INTEGRITY	252
11	OTHER	258
12	SMSF ISSUES RAISED, BUT NOT PURSUED	260
APPENDIX	263
Chapter 9: SuperStream
KEY THEMES	275
1	defining SUPERSTREAM	276
2	the PROBLEMS SUPERSTREAM addresses	276
3	SUMMARY OF PHILOSOPHY	277
4	GOVERNANCE OF THE ADMINISTRATION PROCESS	277
5	QUALITY OF DATA	278
6	EFFICIENT USE OF TECHNOLOGY AND E‑COMMERCE	281
7	ADMINISTRATORS	289
8	CLEARING HOUSES	289
9	TAX FILE NUMBERS	290
10	PORTABILITY, SMALL/INACTIVE ACCOUNTS, LOST MEMBERS AND ERFS	292
11	CONTRIBUTIONS	297
12	OVERSEEING THE IMPLEMENTATION OF SUPERSTREAM	298
Chapter 10: Regulatory settings
KEY THEMES	307
1	MAKING IT ALL WORK	308
2	INCREASED APRA MANDATE — STANDARDS‑MAKING POWER	309
3	CLOSER COOPERATION BETWEEN APRA AND ASIC	315
4	ATO ROLE	316
5	REVIEWS BY THE PRODUCTIVITY COMMISSION	316
6	FUTURE REGULATORY SETTINGS	317
7	ONGOING RATIONALISATION ISSUES	319
8	ELIGIBLE ROLLOVER FUNDS	323
9	SUPERANNUATION COMPLAINTS TRIBUNAL	325
10	THE SIS ACT	326
11	NEED FOR A SUPERANNUATION CONSUMER GROUP	327
12	GENERAL EMPLOYEE ENTITLEMENT AND REDUNDANCY SCHEME	328