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  • Final SuperStream Benchmarking Report (SRF711.0) annual report 1 July 2018 - 30 June 2019

    SuperStream’s goal is to enhance the productivity and efficiency of the superannuation system, especially in relation to the business processes associated with contributions, rollovers and the consolidation of accounts. Industry improvements are intended to create member benefits such as lower fees and improved processing flows.

    We measure SuperStream’s success by tracking conformance with:

    • The Superannuation Data and Payment Standards 2012
    • rates of straight through processing
    • reduction in processing cost
    • improve data quality.

    Benchmarking and evaluation of SuperStream

    The ATO, APRA and Treasury consulted with industry during early 2013 to:

    • develop a broad approach to SuperStream benchmarking and evaluation
    • identify key outcomes achieved.

    Wherever possible, these items were sourced from existing collections such as:

    • APRA’s regular quarterly and annual reporting forms released on 28 March 2013
    • Super member contributions statement
    • other industry collections such as the ASFA VEDA Core member details benchmark.

    During consultation there were a small number of data items that were not yet collected. This would give insight to the rate of take-up of the standard and direct consequences of its adoption.

    See also:

    The SRF711.0 collection

    The SuperStream benchmarking data focuses on contributions processing by APRA-regulated funds and exempt public sector superannuation schemes (EPSSSs). Quarterly reports have been conducted since September 2015 and will continue to June 2019. As such this is the final SRF 711.0 report, as entities are no longer required to provide the data to APRA.

    The ATO uses SRF 711.0 collected by APRA. This report contains ATO analysis and interpretation of the data reported on SRF 711.0 for the period from 1 July 2018 to 30 June 2019. It includes some reporting entities which have a different financial year end.

    Key concepts

    The data tracks the volume and cost of member contributions sent by employers to APRA-regulated super funds and a small number of other super entities.

    Reporting entities

    Reporting entities include:

    • APRA-regulated superannuation entities (RSEs) with more than four members (except as noted below)
    • a number of EPSSS that report to APRA under a heads of government agreement between the Commonwealth and each of the state and territory governments.

    Eligible rollover funds, pooled superannuation trusts or single member approved deposit funds do not report by SRF 711.0.

    Employers

    Employers are required under the Super Guarantee (Administration) Act 1992 to send contributions on behalf of their employees at least quarterly. Some super funds require employers to make contributions monthly.

    SuperStream standard – contributions

    The SuperStream standard requires an employer to send – and a fund to accept – contributions in a specified electronic format with a minimum data set and an agreed set of identifiers such as a tax file number for each member.

    Both data and money must be sent electronically and linked by a payment reference number, to enable rapid straight-through processing by the receiving fund into a member’s account.

    Some alternative electronic methods are allowed under the standard (referred to in the reporting of this data series as Channel B). These include pre-existing electronic portals operated by some funds which must meet certain minimum operational standards to be compliant.

    Non-conforming contributions

    Non-conforming contributions refer to a mix of paper-based, electronic and hybrid processes which do not satisfy the requirements of the SuperStream standard. These are often referred to as Channel C contributions, although they are not a uniform grouping.

    Examples of Channel C contributions include where:

    • an employer forwards contribution information on a form by mail with a cheque
    • some components of data and money are electronic, such as a BPAY payment
    • a digital channel is used but falls short of the minimum requirements under the standard.

    Typically these types of contributions add cost, time delays, errors or complexity to the processing pipeline, with adverse longer-term effects on members. The SuperStream standard aims to reduce contributions coming through these channels to as close to zero as possible.

    Note: This report does not include personal contributions made by members in their own right.

    RSEs and YTD reporting

    Some RSEs operate with non-standard financial years, meaning that any data reported by these entities on a year-to-date (YTD) basis will not be in line with the rest of the reporting population.

    For example, in the March quarter most entities will be reporting their combined first, second and third quarter results on an YTD basis. Entities with a December year end will be starting a new financial year and will report only the current quarter results.

    To avoid confusion in interpreting the data series, we’ve relied on discrete quarterly results for each entity and verified that these reconcile with respective YTD reports. We've built a cumulative YTD and annual review from these quarterly results.

    Note: All figures are rounded to the nearest decimal point. Prior quarter figures are revised in later quarters where reporting errors are uncovered or entities have resubmitted data. These refinements are unlikely to have a material impact on the overall picture.

    Key findings

    Here are some key findings:

    • Total contributions processed are approximately 145 million for 2018–19, around seven million or 5% more than in 2017–18.
    • There is a much higher volume now in the system compared to the 2010 Cooper benchmark, when estimated total volumes were around the 100 million mark.
    • By the end of the June quarter 2019, 97.7% of all employer contributions were received electronically and in conformance with the SuperStream standard – 3.8% higher than at the same time in the previous year.
    • When exempt funds are removed from the reporting data, the current conformance rate remains at approximately 98% (non-complying transactions is 2.3% and non-complying removing exempt funds is 2.2%) indicating an increase in exempt funds transacting in conformance with the standard.

    Figure 1: Contributions transactions by channel – quarterly trend, September 2015 to June 2019

    Graph showing quarterly trends - a summary of trends follows and full details by channel are in the following tables: Table 1 - Channel A, Table 2 - Channel B and Table 3 - Channel C

    • Channel A channel share grew steadily over the 2018–19 year and reached over 30.5 million contributions or 79.3% of all channel volumes in the June quarter 2019, compared to 75.6% at the same period last year. Channel A transactions increased by 8% when compared to the prior year’s total.
    • Channel B’s channel share decreased during the 2018–19 year, with contribution transactions at 7.1 million or 18.3% of all channel volumes in the June quarter 2019, compared to 21.6% at the same period last year. Channel B has declined by 12% when compared to the same period last year.
    • Non-conforming contributions in Channel C have been steadily declining, and reached 0.9 million or 2.3% of all channel volumes in the June 2019 quarter, compared to 2.7% at the same period last year. Channel C transactions have decreased by 13% when compared to the prior year's total.
    Table 1: Channel A quarterly contribution transactions – June 2018 to June 2019 and total since September 2015

    Channel A quarterly contribution transactions

    Volumes (m)

    % of total

    June quarter 2018

    28.2

    75.6%

    September quarter 2018

    26.8

    79.1%

    December quarter 2018

    28.7

    77.1%

    March quarter 2019

    28.2

    78.8%

    June quarter 2019

    30.5

    79.3%

    Total since September 2015

    374.2

    68.2%

    Table 2: Channel B quarterly contribution transactions – June 2018 to June 2019 and total since September 2015

    Channel B quarterly contribution transactions

    Volumes (m)

    % of total

    June quarter 2018

    8.1

    21.6%

    September quarter 2018

    6.2

    18.2%

    December quarter 2018

    7.7

    20.6%

    March quarter 2019

    6.7

    18.7%

    June quarter 2019

    7.1

    18.3%

    Total since September 2015

    136.5

    24.9%

    Table 3: Channel C quarterly contribution transactions – June 2018 to June 2019 and total since September 2015

    Channel C quarterly contribution transactions

    Volumes (m)

    % of total

    June quarter 2018

    1.0

    2.7%

    September quarter 2018

    0.9

    2.7%

    December quarter 2018

    0.8

    2.3%

    March quarter 2019

    0.9

    2.5%

    June quarter 2019

    0.9

    2.3%

    Total since September 2015

    38.2

    7.0%

    Figure 2: Contributions transactions (complying and non-complying) – quarterly trend, September 2015 to June 2019

    Bar chart showing quarterly trends in contributions transactions September 2015 to June 2019 - details are in Table 4 following

    Table 4: Total quarterly contribution transactions – June 2018 to June 2019 and total since September 2015

    Total quarterly contribution transactions for all channels

    Volumes (m)

    % of total

    June quarter 2018

    37.3

    100%

    September quarter 2018

    33.9

    100%

    December quarter 2018

    37.3

    100%

    March quarter 2019

    35.7

    100%

    June quarter 2019

    38.5

    100%

    Total since September 2015

    548.9

    100%

    Note: Data has been rounded to nearest decimal point.

    Channel volumes by fund share

    To better understand the potential drivers of movement between channels, the ATO has grouped super funds into size-based segments. This will reflect each fund's share of contribution volumes. Rather than use the traditional assets view as a discriminator, transactions share better reflects the relative weighting that comes from active members and active employer contributions received by a fund.

    Table 5: Channel A contribution transactions by channel and segment – quarterly, June 2019

    Channel A

    Large tier (Top 20)

    Mid tier (21–70)

    Small tier (71–183)

    Total

    Volumes (m)

    23.2

    6.0

    1.4

    30.5

    % of total

    75.8%

    19.7%

    4.4%

    100%

    Table 6: Channel B contribution transactions by channel and segment – quarterly, June 2019

    Channel B

    Large tier (Top 20)

    Mid tier (21–70)

    Small tier (71–183)

    Total

    Volumes (m)

    4.5

    1.6

    0.9

    7.1

    % of total

    64.3%

    22.8%

    12.8%

    100%

    Table 7: Channel C contribution transactions by channel and segment – quarterly, June 2019

    Channel C

    Large tier (Top 20)

    Mid tier (21–70)

    Small tier (71–183)

    Total

    Volumes (m)

    0.5

    0.3

    0.1

    0.9

    % of total

    54.5%

    33.3%

    12.2%

    100%

    Table 8: Total contribution transactions by channel and segment – quarterly, June 2019

    All channels

    Large tier (Top 20)

    Mid tier (21–70)

    Small tier (71–183)

    Total

    Volumes (m)

    28.2

    7.9

    2.4

    38.5

    % of total

    73.2%

    20.6%

    6.2%

    100%

    Note: Data has been rounded to nearest decimal point.

    After grouping fund results by tiers (large, mid and small), channel shares do not vary greatly – except in the case of Channel C (non-conforming) volumes. Not surprisingly due to their relative size, the top 20 funds account for most of the non-conforming contributions (54.5%), which is a reduction (compared to 67.1% in the same period prior year). However, funds in the smallest tier tend to carry a relatively higher load of non-complying contributions relative to their contributing membership (12.2%).

    Non-complying trends

    The percentage share of non-complying employer contributions has steadily declined over the reporting period. By the June quarter 2019, all entities in the data series reported 0.9 million contributions or 2.3% (compared to 2.7% in the same period prior year) of the total contributions were being received in paper, cheque form or via digital methods not aligned with the standard. When looking at the quarterly percentage trend, Channel C transactions have fluctuated slightly but remained steady over each quarter across 2018–19.

    Table 9: Channel C contribution transaction volumes – quarterly, June 2018 to June 2019 and total since September 2015

    Channel C quarterly contribution transactions

    Volumes (m)

    % of all contributions

    Quarterly trend decline (% share)

    Cumulative trend decline (%)

    June quarter 2018

    1.0

    2.7%

    −46.6%

    −87.0%

    September quarter 2018

    0.9

    2.7%

    0.2%

    −87.0%

    December quarter 2018

    0.8

    2.3%

    −17.0%

    −89.2%

    March quarter 2019

    0.9

    2.5%

    8.0%

    −88.4%

    June quarter 2019

    0.9

    2.3%

    −6.2%

    −89.1%

    Total since September 2015

    38.2

    7.0%

    n/a

    n/a

    Note: Data has been rounded to nearest decimal point.

    Individual funds

    In 2017 we contacted individual funds with the highest amount of Channel C transactions. In discussions with funds about the composition of their non-conforming transactions, some clear patterns emerged. Cheque and manual processing is generally not significant for funds under the 10% transaction level – usually comprising a small amount of re-work items and residual cheques payers. The major part of the tail appears to be comprised of electronic payers (BPAY, Direct debit, etc.) but without all the messaging data – a pathway that is common for many micro-businesses and owner managers.

    A large proportion of non-SG payments are also caught up in the reporting of the tail, such as insurance-only amounts paid by employers.

    Non-conforming contributions

    In order to understand the fund make-up of the non-conforming tail more fully, we have focused our analysis on the 134 most significant entities influencing the Channel C numbers. We have therefore excluded entities that receive negligible amounts of contributions (at a threshold of less than 100 contributions per quarter).

    Findings included:

    • for 2018–19 there were 0.9 million non-complying transactions (134 entities), a substantial decrease (25%) from 2017–18 where the total figure was 1.2 million (143 entities)
    • of the 134 entities that have non-complying transactions, 83.6% of the entities have non-complying transactions that account for less than 10% of their total transactions.
    Table 10: Channel C range and intensity of non-complying contributions, June quarter 2019

    Range of non-complying transactions (%)

    No. of entities in each range

    Non-complying contributions in each range

    50.1% to 100%

    4 (3.0%)

    0.1 (7.0%)

    30.1% to 50.0%

    0 (0.0%)

    0.0 (0.0%)

    20.1 to 30.0%

    6 (4.5%)

    0.0 (1.0%)

    10.1% to 20.0%

    12 (9.0%)

    0.3 (28.6%)

    2.1% to 10.0%

    51 (38.1%)

    0.5 (53.0%)

    0.0% to 2.0%

    61 (45.5%)

    0.1 (10.4%)

    Total

    134 (100%)

    0.9 (100%)

    Note: Includes top 134 funds only, ranked on number of contributions in the last available quarter. Includes exempt funds.

    Cost of contribution processing

    The total cost of processing reflects costs as reported by entities, not necessarily the true underlying cost of contribution processing for the whole superannuation sector.

    At a headline level, costs amount to approximately $135.2 million over the full year to 30 June 2019 and have steadily declined in each quarter, except for the March quarter.

    This total value translates into a total average unit cost of $0.93 per contribution processed across the whole sector in 2018–19. This compares to a total average unit cost of $1.00 in 2017–18 indicating a downward trend when compared to the previous year.

    Table 11: Cost movement – quarterly, 2018–19 and total 2017–18

    Cost movement by quarter

    Total cost ($ million)

    Total contribution volumes ($ million)

    Unit cost

    Quarterly trend

    September quarter 2018

    $34.2

    33.9

    $1.01

    10.9%

    December quarter 2018

    $33.8

    37.3

    $0.91

    −10.0%

    March quarter 2019

    $33.4

    35.7

    $0.93

    2.8%

    June quarter 2019

    $33.8

    38.5

    $0.88

    −5.8%

    Total cost 2018-19

    $135.2

    145.4

    $0.93

    n/a

    Total cost 2017-18

    $137.8

    138.4

    $1.00

    n/a

    Note: Data has been rounded to nearest decimal point.

    Cost per transaction has decreased to $0.88 per transaction (largely due to the increase in June volumes) for the June quarter 2019, compared to $0.91 at the same time last year, indicating a slight decrease.

    The June quarter 2019 unit cost figures show a significant 5.8% decline from the previous quarter, this is in part explained by the transaction volume increase suggesting that costs are predominantly ‘fixed’ in the short-term, at least as far as cost accounting methods are concerned.

    Not surprisingly, costs are not uniform across the industry, and scale is a significant (although not exclusive) driving factor.

    June prior quarter figures can be revised in later quarters. However as this is the last report, no resubmissions will be made by entities.

    A longer-term view on costs

    On a full year basis, total contributions processing costs reported by funds are around $135 million at an estimated average unit cost of around $0.93. Allowing for possible variations in cost methods used by each entity, the total annual cost could be better expressed as a potential range from $135–176 million (assuming a 30% uplift in costs to allow for higher end estimates).

    Some (imperfect) comparisons can be made with earlier reference points such as the Cooper Review in 2010. A high-end estimate based on Cooper figures suggests that total industry costs for processing contributions could have fallen by $480 million (see estimate 1).

    A lower end figure suggests that the reduction could be more like $185–225 million (see estimate 2).

    Comparing the current year 2018–19 to estimate 1 indicates a 71% reduction in costs. Comparing the current year to estimate 2 indicates a 51% reduction in costs.

    Table 13: Total cost of contributions – by period

    Year

    Total costs of contributions ($ million)

    Est. unit cost (average)

    Source

    2009–10 (estimate 1)

    $615

    $6.15

    Cooper Review

    2009–10 (estimate 2)

    $270–360

    $2.70–$3.60

    ATO Estimates

    2016–17

    $145–190

    $1.07–$1.39

    SRF711.0

    2017–18

    $140–182

    $1.01–$1.31

    SRF711.0

    2018–19

    $135–176

    $0.93–$1.21

    SRF711.0

    The Cooper review – the review estimated contribution management costs at $1.25 billion per year out of $3.5 billion in costs related to:

    • member support
    • reporting
    • benefit payment services.

    We estimate at least 50% of contribution management costs were related to employer contributions processing.

    ATO estimates are based on ATO cost modelling derived from Rice Warner benchmarking (2010–2014), fund interviews and internal sources.

    SRF711.0 (2016–17) – estimate based on quarterly cumulative data to June 2017 and ATO cost lift factor.

    SRF711.0 (2017–18) – estimate based on quarterly cumulative data to June 2018 and ATO cost lift factor.

    SRF711.0 (2018–19) – estimate based on quarterly cumulative data to June 2019 and ATO cost lift factor.

      Last modified: 19 Feb 2020QC 61468