The Cooper Review on superannuation has called for an overhaul of the way super funds manage their "back office" operations by recommending a new tax file identifier number to track lost funds and the introduction of e-commerce reporting.
The federal review panel, chaired by former ASIC deputy, Jeremy Cooper, identified the traditional "back office" as an obsolete drain on funds and administrative resources, saying it was characterised by manual processing and a lack of industry standards for data reporting that result in millions of lost super accounts.
To repair the situation, the panel has recommended a new program to straighten out the back office called "SuperStream".
Superstream, as the name suggests, aims to streamline the way that the back office of a superannuation fund tracks and manages super contributions.
After analysing submissions, the panel recommended the use of an individual's tax file number as a personal financial identifier. The individual's tax file number would be recorded on each fund they have.
The report called for the implementation of an online system that would allow a user to log-on with their tax file identifier number and view all of the accounts that their number belonged to. The system would be developed and maintained by the Australian Taxation Office, giving administrative power back to a user to consolidate their own super funds.
In addition, the panel suggested that the government impose a fee to be paid by the employer if it chooses to contribute to a fund via a manual method such as a cheque.
The Cooper Review also called for obsolete and error-prone manual reporting methods to be replaced by e-commerce, which it said would improve reporting standards and work towards a more environmentally-friendly industry.
It recommended standardising data reporting by employing a method similar to the Australian Government's standardised business reporting (SBR) process. It called for the Department of Treasury to convene a group with key members of the Australian financial sector to develop SBR-like standards for the system.
If each of the panel's recommendations were to be enacted, the report said that Ernst & Young and SuperChoice have estimated that savings of up to $1 billion per year are achievable. BT Financial Group also estimates savings at 24 per cent of administrative costs.