Over emphasis on SuperStream costs

The superannuation industry has placed too much of an emphasis on SuperStream costs that may be over-stated, according to Westpac director of global transactional services and SuperStream advisory council representative Emma Dobson.

Dobson said that if funds wanted to build their own gateway capabilities, costs may blow out but they could gain a competitive advantage by outsourcing the function to become compliant prior to the 1 July 2015 deadline.

"There's a lot of talk about the increased costs that will come through on the back of it (SuperStream). I don't believe the numbers are as high as they (say)… if everyone wants to build it themselves then absolutely it will dramatically increase the costs," she said.

Dobson questioned whether super funds would be able to achieve the economies of scale necessary to keep costs down if developing their own systems.

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Legacy systems were an issue for both retail and industry funds, Dobson said, and would increase the costs of funds developing their own clearing houses.

Funds needed to assess the governance of clearing-house providers, as employers would expect security and have questions as the reform deadline loomed ever closer, according to Dobson.

"You can't determine a price aspect until you know what governance businesses will require, but you can be compliant with what you need to do around data standards with rollovers and be ready in terms of taking contributions right here right now," she said.

Outsourcing clearing-house functions could save costs and streamline the process without investing in the infrastructure or governance as yet, according to Dobson.

Dobson said its clearing-house facility had experienced dramatic growth over the last two to three years as choice took hold and employers' super fund contributions were directed to a litany of funds.

Club Plus implemented its clearing-house, which was developed by Westpac, two weeks ago.