Unit costs seven times too high in super

The superannuation sector processes more than 100 million transactions annually, according to the Cooper Review, mostly the receipt of contributions but also payment of benefits and rollovers to other funds.

These transactions cost $3.5 billion to process. Of this, $1 billion is spent on "support", $1.3 billion on contribution management, $250 million on reporting and $1 billion on benefits payment services.

The review suggests that unit costs of "straight through processing" payments could be around five cents, or one seventh the unit cost of present practices.

The review noted that 60 per cent of employers do not use wholly electronic payment methods to pay super. The review said 38 per cent use only cheques and 22 per cent a mix of cheques and EFT.

The issues blocking efficiency gains in super payments are well known and include a lack of data standards, multiple platforms and proprietary systems,
manual and disparate processes and the lack of a robust member identifier.

While promoting the super sector to "use or adapt generic e-commerce solutions and other techniques" the Cooper Review appears realistic about the path of getting there.

"The reality is that a world class system will not be achievable easily or quickly and the cost of implementation will need to be carefully measured against other outcomes," the authors wrote.