Choosing a corporate super fund is a minefield. It seems that everyone has their hand in the cookie jar when it comes to corporate super, from the government, to banks and various industry funds, but to whose advantage? Certainly by now, with so much involvement from the government, super must be perfectly organised? And surely industry super funds, who are all aligned to one union or another must be working in the best interests of their members?
And yet, it’s likely that your choice of corporate super fund has been compromised in some way or another, whether it be by marketing and inducement from product providers or by modern awards legislation which dictates a limited range of products that can be chosen around EBA’s.
The truth is that it’s rarely well managed at an individual account level, bad practices are rampant with most product providers and there is little being done by the government or product providers to resolve the issue. There’s a lack of transparency in the industry and as a result employers miss out on an opportunity to maximise the potential of one of their most significant employee benefits, and employees see very little value, instead they languish in their funds default account.
The lack of transparency was laid bare by the commentary from the Royal Commission, and based on this commentary, it appears that some trustee boards are not fulfilling their responsibilities. There is often a brick wall between the trustee board and commercial management of every superannuation product provider. Trustee boards are often kept ignorant of market interactions led by commercial management in achieving their targeted financial outcomes. The decisions of trustee boards usually seem to revolve around avoiding being sued, instead of protecting the interests of fund members.
The quality of corporate superannuation funds, and the funnelling of employee’s into default super accounts can also be in part due to the behaviour of employers. Some employers disagree that they have a responsibility to ensure value delivery to their employees, instead believing that their obligations end with making employee contributions. Employers don’t necessarily understand that super is an employer funded employee entitlement and they don’t regard the payment of contributions as a part of their core business.
Any medium to large sized employer should be treating super as a serious employee benefit as it is a significant part of the financial package being offered to employees. The problem for most medium to large sized employers is they lack the technical expertise internally to get the best performance from their product provider, partly because their current product provider is their sole source of information.
Commercially, many medium to large sized employers have an attitude of “if it ain’t broke, don’t fix it”. Companies are far too busy to examine the systems they’ve had in place for years. Unfortunately this can mean an otherwise excellent workplace culture can fall down around a significant employee benefit, and you might not even realise it until the lawyers are already involved.
The next problem is knowing how to examine the delivery of corporate superannuation value objectively and then how you continue to manage the delivery of that superior value going forward. This will involve finding a source of truth to inform you around what you have and its relative merits against other product options.
The actual process requires someone with expertise on different service models and authority within the financial services industry to discuss poor service with your current provider.
The team at AXIS Financial Group have the skills and experience to challenge your current super provider and help you find the right fit for your company and your employees. Contact us today.
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.