Will Cooper reshape the world of super as we know it? ASFA Day 2

Jeremy Cooper may not be planning wholesale changes to our super system. On the other hand, his comments in an ASFA plenary session suggest he's certainly not entirely buying the industry line that "it ain't broke so don't fix it".

In a wide ranging speech, Jeremy Cooper outlined the potential governance issues facing the industry in 2025, including the potential for a group of four "super" super funds to dominate the landscape, providing direct private equity sources of funding and wielding far greater leverage in their investment decisions. Cooper drew a parallel with Canadian behemoth funds Ontario Teachers and the Canada Pension Fund.

In this brave new world, the superannuation industry "dog" would no longer be wagged by the funds management tail. Cooper shared a possible view that super the system, if re-designed around members' interests, may look significantly different to the possibly funds management-centric structure of the industry today.

He asked if perhaps superannuation trustees are captive to their service providers, and suggested that without greater scale our funds are at a significant disadvantage in bidding for access to global assets.

In a message that made trustees happy, although perhaps didn't deliver joy to fund managers, Cooper suggested "Super funds have to start acting like they are at the top of the food chain", using their power to benefit members.

Other advantages of scale? Lower fees, in-house investment expertise, improved diversification, lower admin costs per unit and better member education.

Trustees urged to look longer term than the nation's leaders - ASFA Day 1 closing

In closing the day's proceedings, Dr Keith Suter countenanced three scenarios for the future world order - "business as usual", "break-up", "break-down" or "breakthrough".

In the "breakthrough" scenario, Australia is poised to make the most of a world in which both the economy and how we manage scarce resources are reinvented - to see the globe become both economically and environmentally more sustainable.

Speaking directly to those in the industry, Dr Suter argued that politicians in power, subject to the very short-term and immediate pressures of the 24/7 media cycle and electoral expediency, are unlikely to bring about longer term solutions or responses to these scenarios.  With politicians focused on the short-term issues that dominate the news cycle, at the expense of future-defining issues, then other decision makers must pay more attention to the less urgent but more important "bigger" issues.

The most dominant of these bigger issues is the start, for good or ill, of a new global economic era.

Against this dramatic backdrop, Dr Suter urged fund trustees to take the longer term, and arguably braver, view.  To look beyond existing paradigms to see what is, and what may be, and to plan for a number of very different scenarios.  

While the future may not be certain, the obligations of those in the industry are - to safeguard the long-term wealth of Australians.

Carden Calder is attending ASFA 2009 for BlueChip Communication Group. BlueChip is Australia’s leading financial services communication firm. We help “tell your story” through media, online pr, compelling content and other forms of communication - so the people who matter most want to do business with you.

Member research - Super? What super? ASFA Day 1

On an individual member level, ASFA research conducted by Auspoll shows what superannuation members really think about it all. And the short answer is they don't really think.

At least they don't think much about their super.

When asked which superannuation issues caught their attention recently, the largest portion of respondents (47 per cent) could not think of any - and answered "none".  Only some (29 per cent) offered losses or a decrease in the value of their investment, and a very small number (6 per cent) suggested fees.

Have people changed their investment options in response to market movements?  Most (87 per cent) have not.

Which are the two most widely-held funds?  Australian Super and AMP, by a considerable margin.

In terms of split between industry and retail, the survey found some 48 per cent were in industry funds, 29 per cent in retail and a far smaller proportion (3 per cent in each) were invested in a corporate or self-managed fund.

It seems members, in the wake of one of the worst years on record for returns, are largely satisfied (79 per cent of respondent) with their super funds - consistent with past findings.

Interestingly, those in the public sector and industry funds show far stronger satisfaction ratings than retail fund members.

Of the small number not happy, why is that?  Most said it was about performance and / or fees. 

For those who are happy with their fund, it's down to low or reasonable fees, performance and communication.

And finally, what do members looks for in a fund?  Performance, reasonable fees, safety or security, and consistency and stability.