Employer Super and Coronavirus

Employer super and the coronavirus (COVID-19) pandemic – April 2020

Employment Demographics

When considering the impact of Covid 19 on super, there are broadly three key demographics with very different considerations and aspirations that are being affected by the current crisis.

The first group is retirees, who are currently devastated by the drop in valuation of their super. The second is over fifties who currently make up about 25% of the working population, and finally there is anyone under fifty, a group which currently makes up 75% of workers.

Below we explore the impact on working Australians and the likely outcomes for their superannuation as an employer-funded entitlement.

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Serious Super Choices

Every employer and individual employee makes a decision about which super product to use and which portfolio to invest in – making careful decisions about super products has never been more important.

Generally, most employers and employees have learned to mistrust certain super product providers whilst becoming loyal to others.

What the public often doesn’t see is that there are a number of important factors that differentiate the good products from the bad, factors that are rarely presented in the media when the year’s best and worst returns are being reported on.

Annual reports on the ‘best’ superannuation fund and ‘dud’ funds are often based purely on annual investment returns, but the investment methodologies of funds are rarely explained – product providers may have 99% of their asset based on market valuation or far less, with the reminder based on quarterly valuation by an ‘independent valuer’. So the advice we receive about super funds is often unsound and akin to comparing apples and oranges.

Certain product providers may look good on paper but have significant exposure to illiquid assets, an issue that has been highlighted in the current crisis. Employees impacted by COVID-19 and looking to withdraw thousands from their super (especially given the government’s early access scheme) will force illiquid funds into selling assets at discounted values to meet demand.

Super providers are first and foremost trying to sell a product, and so they market their product to their target audience in an effort to kill their competition. Like any product, employers and employees need to look beyond the advertising campaign and consider the true value of the product super providers are delivering.

The current covid-19 crisis should emphasise the importance more than ever of careful service model analysis from an informed external party, as there are important factors not readily apparent to employers and employees that can hurt us in a crisis.

Employers have a duty of care to actively manage the delivery of value to the employees – super is a serious financial benefit which plays an important role in motivating the workforce, and protecting them in times of crisis, as we are currently seeing.

Market Volatility in Australia due to Covid-19

COVID-19 has caused a significant impact on our way of life – undoubtedly the world has changed, possibly for good.

The measures introduced to limit the health risk involved with the pandemic have caused unprecedented shut-downs, with the Government offering up huge stimulus injections to counter the negative economic effect.

While the impact of COVID-19 in Australia is not yet as severe as the impact in other countries, the Australian share market has tumbled in a similar way to other global markets, this is because our economy is dependent on:

  • Exports
  • Immigration to support our workforce
  • The Australian property market and the level of domestic debt

Any serious upward disturbance in unemployment can have a catastrophic effect on property values and therefore the banking sector.

Volatility in Global Markets

Whatever you might say about our domestic economy, Australia has been very robust when compared to other countries. All major economies around the world are seriously affected by COVID-19 as a health risk.

This means big challenges for countries trying to stem the flow of the virus and likely a long road ahead for countries dealing with the economic fall-out of the pandemic. The negative impacts on the world economy will undoubtedly last well beyond the end of isolation and other precautionary measures.

Economic growth globally will be negative in the next twelve months and possibly longer.

The 25% of Over Fifties

The current older generation has been through the GFC and wondered at the time if things might ever recover. Whilst the economy did eventually recover, it took many years.

Forecasters at the time were divided about the duration with some talking about the Great Depression and how it took between 5 and 7 years and others more pessimistic, saying that everyone needs to get used to single digit returns.

The GFC occurred in 2008 and it did take between 5 and 6 years to recover with investment returns since seldom behaving the way the forecasters had predicted at the time.

If you’re in this group then from a superannuation perspective, you need to talk regularly to someone who knows more than you do about how well your product provider is dealing with the current circumstances in the market and what you as employer should be doing to both protect and then grow your super asset. This will help you to make sensible decisions about super as an important employee benefit throughout this Covid-19 crisis.

The 75% of Under Fifties

Theoretically the longer an employee has before retirement, the less concerned he or she might be as this will not be the last economic crisis they will face before they retire. However with growing instability and thousands (up to a million) of Australians being made redundant, I am sure they are all as worried as the older generation.

So equally, as their employer, you can benefit from engaging with someone who understands super as an employer funded employee entitlement; irrespective of what product they might be in and in their style of investment.

Every product has their particular service model and every product promises they will optimise your employee super. Few employers know how to evaluate their current product provider as a supplier and so it’s important to ask questions and get advice from a party that understands super.

This document was prepared and issued by AXIS Financial Group (ABN 21 092 889 579, AFSL 233680). The information contained within it is not advice. It provides general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider talking with your financial adviser before making an investment decision. Information in this publication, which is taken from sources other than AXIS Financial Group, is believed to be accurate. However, subject to any contrary provision in any applicable law, neither AXIS Financial Group, nor its employees and directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it.


Mitsui & Co. (Australia) Ltd engaged AXIS Financial Group in reviewing the existing employer super arrangements and clarifying which product provider might be best for Mitsui & Co. (Australia) Ltd and it’s group of companies.

AXIS Financial Group provided a concise explanation as to who might be best and why, in particular ensuring that the internal project team had the information to feel confident as decisions were made. The project team moved from arguably being daunted by the prospect of improving this particular employer funded employee entitlement and better understood how to manage super as a remuneration benefit through the detailed analysis and explanation provided by AXIS Financial Group

Antony Auliso
General Manager - Human Resources Division
Mitsui & Co. (Australia) Ltd

I want to thank AXIS Financial Group for their efforts in handling insurance claims on behalf of the employees of WesTrac. From the moment AXIS Financial Group were appointed to the task, they moved so seamlessly into position and have made sure that WesTrac is not only better serviced as a result but also more informed about claims progress. I also note the outstanding results achieved by AXIS with respect to marketing and placement of our employer super policy.

It seems nothing is a problem for the AXIS team and I would commend all employers to consider this service.

Gary Carter
Group Insurance Manager
WesTrac Pty Ltd

AXIS Financial Group’s knowledge of employer super is second to none.

DXC tasked AXIS Financial Group with consolidating multiple superannuation funds to a
single company-wide default fund. They delivered, displaying superior knowledge of their
industry, along with the highest level of service and diligence.
From start to finish – the initial analysis of our previous funds, the detailed tender process,
the transition to our new fund, and post-transition – AXIS Financial Group always made
themselves available for support.
We strongly recommend speaking to AXIS Financial Group for all matters relating to
employer super.

Michael McGoldrick
Director, Compensation Asia Pacific
DXC Technology