Internet System to Cut Superannuation Costs by AUS$500 Million
Page 1 of 1
Tradegate ECA, a peak industry body for electronic commerce in Australia, has launched an Internet-based superannuation notification and payment system that is expected to cut costs to employers and fund administrators by AUS$500 million a year.
The new system, known as EC-Net, will streamline superannuation procedures while cutting costs to both small businesses and superannuation fund administrators (SFA).
Trials have show that EC-Net, which allows employers to send superannuation information and payments electronically to various SFAs, has cut the time needed for employers to handle super payments to as little as 15 minutes a month, according to Tradegate Australia's CEO Andrew Robertson.
SFAs will be able to match information about the contribution with the payment, thus providing key benefits such as easy reconciliation, cleared funds and little manual intervention.
Credits for superannuation payments are captured through a holding account with Chase Manhattan Bank, and at the end of a statutory period the bank deposits the funds into the SFAs normal trading account of their choice. Each SFA will pay an annual licence fee to use the EC-Net software.
An industry survey estimates the annual cost of administration for super funds at AUS$2.2 billion. EC-Net has the potential to effect a 20 per cent reduction in that cost.
The first major administrator to adopt EC-Net, GIO Australia, is already accepting payments and contributions information from a group of small businesses.
EC-Net was developed by Tradegate ECA in conjunction with GIO Australia, the Chase Manhattan Bank, Austrapay Limited and software and security developers Hypercom Net Transactions, with the support of the Australian Taxation Office and the Department of Industry, Science and Resources.
It also has the ability to handle other compliance tasks, including PAYE (Pay-As-You-Earn) tax, child support agency deductions and employment declarations.
Potential users include just over one million small businesses in Australia that submit payments on behalf of 3.5 million employees.