Everyone acknowledges that SuperStream has imposed a significant burden on super funds and the pain won’t go away any time soon. The bulk of automated contributions processing and electronic communication between funds is still to be implemented and will involve significant effort from all parties in the next year or two.
It’s valuable, though, to take a longer term view and understand the benefits that are available from the SuperStream reforms. The ATO’s vision extends beyond 2017 and has messaging playing a broader role in fund to government reporting. It’s highly likely that messaging standards will be adopted more broadly.
Electronic messaging can be applied for different uses across a wide range of business lines, offering many advantages and opportunities. For example:
- Fund custodians – daily asset positions are currently exchanged manually. By applying message standards and straight through processing, a level of automation can be achieved.
- Insurance platforms – new applications, adjustments, claims processing between life companies and re-insurers can be managed more efficiently.
- Legislative and regulatory reporting – for example, tax reporting and submission of forms can be enhanced.
- Integration of third party products – for example, income stream products such as annuities can be better managed.
Effective use of electronic messaging will lead to more automation, fewer paper-based transactions and, consequently, greater efficiency, lower processing costs and reduced risk. Already, we’re seeing signs of these productivity improvements flowing to super funds, where rollovers are fully – and contributions are partially – managed electronically. The UK experience also demonstrates the inherent value of electronic messaging when the technology is well established and broadly adopted.
It is worth noting that registry systems have evolved to the point where they too are ready for this form of data exchange. Remember though, that messaging alone isn’t the be all and end all of process modernisation within super. Technology alone won’t guarantee the greatest level of cost reductions. A poor process automated is still a poor process. Funds need to take the opportunity when implementing new technology solutions such as messaging to improve existing processes and, if the budget allows, consider a broader and deeper level of business transformation.
So, what does this mean for everyone labouring under the SuperStream compliance burden today? There is a bright side of life. SuperStream standards have the potential to deliver a much larger range of benefits, beyond those currently envisaged. The technology to meet these standards is ready and waiting and investing time and resources in electronic messaging today will have a pay-off in the future. Messaging will create a new paradigm for data exchange that will benefit all stakeholders for years to come.