THE head of the Rudd government’s inquiry into superannuation has vowed to push ahead with his controversial proposed new architecture for the $1.2 trillion sector despite fierce opposition from the industry.

Jeremy Cooper, chairman of the Super System Review, yesterday told super industry members that while the inquiry panel was not seeking to cause needless disruption or cost, the current super system needed to be “recalibrated” because far too many people were disengaged with their super.

Late last year, he proposed a new model where super fund members would be classified on the basis of whether they were actively involved with the management of their super.

Members who did not make a choice about their super would be placed in the “universal” category, a low-cost option with a single diversified investment strategy.

Major industry super groups have made a joint submission arguing that the proposals are too drastic and would lead to higher costs and complexity.

At the Australian Institute of Superannuation Trustees’ annual conference of major super funds in Brisbane yesterday, industry members stepped up their attack, saying the proposal was 20 years too late and arguing that it would have been better to implement the model when compulsory super was first introduced.

“We are not trying to say there is nothing wrong with the system . . . but we don’t see a need for the review to pull the system apart and start again and that’s how we see this architecture,” AIST chief executive Fiona Reynolds said.

But Mr Cooper, a former Australian Securities & Investments Commission chairman, said while some parts of the industry would find the universal model “quite challenging”, the rising cost of super needed to be addressed.

He said choice of fund — the right Australians have to choose their own super fund — was inadvertently driving fees higher as funds spent more money on advertising and “bells and whistles”.

He said the review was also looking to save the industry $1 billion a year by streamlining back office functions and making better use of tax file numbers to identify members.

Key to this initiative would be making the industry paperless, with all transactions electronic. Mr Cooper has also proposed to scrap member protection for small accounts, saying it costs funds a fortune to administer.

Under the current rules, super funds cannot charge fees for balances below $1000 when the investment earnings on that account are less than the fees the fund charges.

(www.theaustralian.com.au)