Unintended Consequences of the Cooper Review

When the establishment of the Super System Review (aka the Cooper Review) was announced by the then relevant Minister, Senator Sherry, many thought that the Review would be the means by which large super funds would make life unpleasant for SMSFs.

However, the release in December 2009 of the Statistical Analysis of SMSFs undermined many of the prejudices concerning SMSFs, particularly those held by advocates of large super funds. With the SMSF sector found to be reasonably well performing, the focus of the Review changed to large super funds.

The Release of the Final Report of the Cooper Review on 5 July 2010 confirmed that the focus of the Review had become large funds – including industry funds. This change of focus was reinforced when the Government on 16 December 2010 released its response on the key design aspects of the “Stronger Super” reforms (as the Government called its response to the Cooper Review) as well as the finer details on 21 September 2011 (when the draft legislation for the “MySuper” changes was released).

It is fair to say that the Review and the Government’s Stronger Super reforms will have the most significant impact on large super funds and are centred on three themes which are – “MySuper”, “Super Stream” and “SMSFs”.

The “MySuper” theme is concerned with the transformation of super products into a standardised low cost /no frills product design. The “MySuper” product is intended for super investors who do not actively choose another super product such as a retail fund or an SMSF.

The “Super Stream” theme is concerned with improving the efficiency of super transfers involving large funds – such as contributions and inter-fund transfers.

The SMSF theme is concerned with various relatively minor changes centred on SMSFs.

Draft legislation has now been released in respect of the first tranche of the “MySuper” changes. The second and subsequent tranches for the “MySuper” changes will be issued later.

Draft legislation for the “Super Stream” and “SMSF” themes will be released later this year.