“There are still some practical challenges in regards to this because proprietary clearing systems don’t have a secure electronic method for delivering the TFN to choice funds – their competitors. Even if they did, it is unlikely – due to low volume – their competitors would log in.” This secure web access to the recipient fund is “an enormous and emerging issue in regards to choice transactions which are now approaching 15 per cent of the population”, says Fielding. He puts the case that an increasing number of contributions to a fund come from employers who have no past or present relationship with that superannuation fund. “For example, what if BHP’s default fund is Russell but an individual employee exercises choice for AustralianSuper. BHP has no real relationship with AustralianSuper, so how does BHP get the TFN for the employee who exercised choice to AustralianSuper? Post, email or web?” he asks.
An increasing amount of the contributions coming to the funds are coming from employees exercising choice rather than “known and trusted employers”, says Fielding, so secure web-based TFN delivery to superannuation choice funds is becoming the “absolute key and critical point of difference to solving an employer’s administrative and compliance concerns. Major superannuation providers such as AMP, ING, REST and QSuper offer this as an absolutely fundamental point of difference.” Cost reduction is also being touted as a big plus in the easing of TFN restrictions. BT Financial Group’s Alyson Clarke estimates that up to 5 per cent of operational costs could be cut if the TFN was used as an identifier, and trustees were permitted to consolidate for members, thus reducing the member’s role in the rollover to a matter of minutes. A further 20 per cent could be saved if manual work and paperwork were removed through mandating electronic forms and financial transactions.
BT’s estimates of operational savings come from cuts of up to 40 per cent in direct processing costs [onshore and offshore], a small reduction in contact centre costs due to fewer queries from members, and a 10 per cent cut in operational support costs. In relation to the much-talked about sacred cow of privacy, Clarke says “we don’t believe that the use of TFNs for superannuation causes privacy issues, and we believe any such concerns are outdated based on the extent of information currently generally available”. Further, BT is advocating that the ATO should be able to list an individual’s super fund/s and account balance/s on their tax statements. “The amount of lost super,” Clarke says, “is a very good indicator of the level of disengagement from super.” To remove money-laundering concerns, Clarke says that the only parties allowed to consolidate accounts on request would be the trustees of Responsible Superannuation Entities [RSEs] which have undergone APRA’s rigorous licencing process and which continue to be APRAsupervised.