The History of Super (a boring title for a vitally important issue)
Super is vital for practically everyone, but the various governments and the Super industry have not managed it like it is. Employers have now had false promises, and the wool pulled over their eyes for three decades, and so I would not blame them for having a pause for thought now. Therefore, wise employers, like you, are more inclined to seek specialist operators (like us) to manage their reward and remuneration packages. They realise Super is the biggest employee benefit in need of improvement, and that managing and overhauling their employees’ Super is a monumental exercise, as it is often the last thing to get attention if it gets any attention at all.
Considering that Super was introduced by highly intelligent people and theoretically managed by established companies led by executives with national profiles. It is surprising that the banks who made these exciting acquisitions, developed strategies of integration and cross-selling – eventually dropped this jewel they had gained years before. The media excused the error as a flawed strategy around vertical integration, which is good PR, but not a very profound explanation at all.
A PR exercise into Super mismanagement
For whatever reason, employers were fooled into mismanaging Super as an employee benefit. Government legislation became more of a tussle between ideologies, and there was little discussion about who owns the asset and employees’ needs. All sides of politics assumed that Super is a national asset rather than an individual’s. In effect, it has shaped public opinion to align with this concept.
Super is, in fact, an employer-funded, employee entitlement, and should be managed as such. In the commercial world, there are always two different considerations; one being what the service provider earns versus the value delivered. It is noticeable that no employer ever asks the Super service industry how they might improve their service model. Employers tend to accept what they are given; they listen to the value proposition and do not ask the service provider to prove their worth.
Without explanation to its members who foot the bill (and it’s one large bill), there is an average design through employer super that delivers average value.
On one occasion, where a large employer asked a platform to disclose every dollar that hits their revenue line – they were met with shock and a refusal to disclose the information. The platform actually expressed anger with the client who dared to ask the question.
Who is being held to account?
Employers seem to have preconceived notions of one platform and another. Platforms seem to change the functionality of their product significantly without comment from the employer. No one is held to account effectively. Potentially, this could be because it is an employee’s money, not the employer’s.
When a major employer hesitated for a few months on changing platforms, which could have reduced administration fees to employees by $250,000 collectively. We questioned whether he would have acted the same if it was company money. He quickly realised he would not and made the move for the benefit of his employees.
Employers need to select the right platform for their employees and hold their chosen provider to account regularly on their promises to deliver superior value. This requires a significant amount of knowledge around legislation and compliance, product, and asset management, and the ability to offer advice at an individual account level.
Most employer super-platform presents a value proposition that, if scrutinised, does not deliver value at an individual account level and fails to optimise employees’ super as a personal asset.
Is there a universal solution?
When the Government introduced the MySuper investment default as a universal solution around employer super – there were two dominant designs; one known as life stages/cycles and the other a fixed investment strategy (usually a balanced portfolio). There are significant problems in optimising super as an employee benefit with both.
Contact AXIS
Want to learn more? Get in touch with Roy or Richard at AXIS on free call 1800 111 299 or email consulting@axisfg.com.au..
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