Turbo charging the super fast highway
SuperStream, the biggest change to the superannuation service sector for some time, has now been largely implemented. The industry was initially sceptical about the promise of a centralised, simple method of payments transfer for the super sector, but as almost all firms are now using the system, many are asking, ‘what next?’
It’s clear that SuperStream is here to stay. The widespread government integration of the program and the imposed regulatory deadlines have ensured it is the core method of super processing.
According to an Australian Taxation Office (ATO) benchmarking survey released in December 2015, more than 70 per cent of members’ super contributions to APRA-regulated funds were being sent electronically in the new SuperStream format. In the first quarter of 2016, this figure is likely to have risen as smaller tier firms have come on board; they have until 31 October to achieve compliance.
So the answer to ‘what next?’ seems to be that further growth of the platform will lead to more widespread uses. The ATO has already indicated that it is looking to expand its use to other super interactions and reporting.
One such enhancement, the Member Information Exchange (MiX), is already underway. This messaging framework aims to improve how funds and the ATO exchange information on members.
Currently, funds are required to report member information, including member contributions, unclaimed super and invalid tax file numbers, to the ATO at defined intervals through the year. MiX will replace the existing file-based exchange with SuperStream’s simplified message-based exchange.
SuperMatch2, an enabling service that allows super funds to access information from the ATO to help consolidate multiple accounts for their members, represents a further use for the platform.
While some may argue that these initiatives are minor, they signal a much broader and pervasive trend that will soon reach beyond the ATO. In the digital era, data exchange between funds and non-government entities will inevitably call for secure, end-to-end electronic messaging that replaces paper-based systems.
Wherever there is a requirement to exchange data with external entities, the opportunity arises to manage data exchange more efficiently, reduce risk and achieve operational cost efficiencies by transitioning to an electronic messaging solution. This is the key driver behind the development of further uses of the SuperStream platform.
In a super landscape dominated by constant downward pressure on costs and the pursuit of economies of scale, the more savvy super funds are positioning themselves to capitalise on the cost savings from optimising electronic data exchange not just with the ATO, but across all forms of messaging.
Many funds are coming to realise that the piecemeal solutions they put in place to meet their initial SuperStream compliance requirements – which involved both automation and a continued reliance on manual processes – will not be adequate to meet their long-term needs. As the volume of data increases, the level of manual processing will rise and, along with it, the risk of process failure.
Automation of systems will present the greatest opportunity for cost efficiency over the next decade.
More and more funds are biting the bullet and investing in fully automated messaging solutions that not only meet today’s compliance obligations, but can be leveraged to meet a range of government and non-government data exchange needs.
Offering straight-through processing and an auditable history of sent and received messages can help eliminate errors associated with manual handling, substantially reduce risk and keep a tight lid on operational costs.
This can deliver funds the sustainable competitive advantage they need to differentiate themselves in a tightly contested market.
Mark Thomas is head of online services for software provider Bravura Solutions.