A survey of employer-sponsored superannuation schemes backs up claims that the year-old disclosure regime is more of a hindrance than a help.
The Office of the Retirement Commissioner and the Association of Superannuation Funds conducted the survey after the Periodic Review Group highlighted the issue last year.
The report finds that the disclosure regime is a big time and cost burden for sponsors. While the report doesn't conclusively find that disclosure requirements are forcing schemes to close there is anecdotal evidence from other sources suggesting that is the case.
The costs of preparing an investment statement or prospectus.
Average
(mean) cost
Range of
costs
Median
cost
Investment Statement
$5,600
$500 - $38,000
$4,000
Prospectus
$10,800
$1,000 - $41,500
$9,000
Overall Cost
$12,600
$1,500 - $63,000
$10,400
Actuary Jonathan Eriksen says many schemes have closed and some have switched to a master trust-type structure because of the disclosure regime.
Survey respondents said that the objectives of the disclosure regime were admirable, however a prospectus and investment statement will not provide clear but informative documents targeted at the "prudent but non-expert investor".
Also they noted employer funds are not available to the general public so a prospectus is of little value.
As reported earlier by Good Returns, scheme sponsors and lawyers have been frustrated in their dealings with the Companies Office as the staff there have limited experience on superannuation matters.
This problem has been compounded, to a degree, by the short time frame between when the legislation was passed and the date it became effective.
Some employers provided breakdowns of the costs they face. On average, it has taken 56 hours to prepare the investment statement and 79 hours to prepare a prospectus.
Professional fees have been the highest component of costs, particularly for prospectuses. Employers have paid on average $7,800 in professional fees for prospectuses while the schemes themselves paid an average of $9,300 in fees.
The employers were also asked to assess the value of the investment statement and prospectus to scheme members on a scale of 1 (no value) to 5 (high value). The average rating for a prospectus was 1.5 while the average rating for the investment statement was 2.2.
A survey of employer-sponsored superannuation schemes backs up claims that the year-old disclosure regime is more of a hindrance than a help.