Most employers have a clear salary or wage structure in place, recognising it’s importance as an attractive benefit for employees but rarely do they go to as much trouble to position super as an employee benefit, mainly because they view it as too difficult to manage. Salaries and wages provide for an employee’s current financial needs and their investment in super provides for an income for future needs in retirement. Current legislation provides for an increase in employer contributions to super but there is some argument in the media that this increase will replace wages growth, a consideration being politically debated at present.
Super as a Remuneration Benefit
Many employers and employees do not have a deep technical understanding of employer super, the value proposition of their product provider and the quality of the service being delivered.
Most decisions these days are leave well enough alone as far as employer super is concerned and, anyway, every employee is welcome to exercise choice of fund.
Unfortunately, this is not really the right way to do things in modern times as any medium to large sized employer can negotiate an employer plan at discount rates and also further express their brand with an innovative approach to plan design.
Current Government Legislation
While the government doesn’t often make any long term announcements about where they are taking super, I am sure they know what they are doing to arrive at a certain destination. That does not mean it will be better managed or indeed managed in anyone else’s best interests.
So government initiatives around super have been plentiful in most years but especially so since the Royal Commission of 2018. Recently announced or implemented initiatives involve:
o The APRA heat map which examines product based upon a defined service model
o “Your Future, Your Super” announced in the recent federal budget, involving stapling an employee’s first super account as he or she changes employers
o The government intends to regulate so they can stop certain products taking on new employees which is one step away from closing a product which does not deliver to their expectations
o The government intends to apply a new regulation to trustees where decisions must be framed in the best financial interest of members
o The ATO has been given a budget to save on fees as charged and in particular to create a super product comparator around fees and performance
Surely a well organised and informed industry can best manage super as the employer funded employee entitlement it is. Super is a personal asset and not a community asset. Australia has successfully created a retirement savings pool of $3 trillion. While service outcomes need to be improved, there is a significant opportunity being missed by medium and large sized employers to better manage their employee’s motivation by making a statement of brand value in paying attention to their existing product provider and whether or not best value is being delivered through employer super.
What to do?
AXIS Financial Group has specific service beliefs in all activities and especially around employer super as a remuneration benefit:
o Work out what you need to know
o Seek out the relevant information
o Do not make a decision until you have the information you need
o Do not simply rely on the information being provided by your existing product provider
o Do not rely on an alternative product provider as they will simply want your custom
o Analyse, analyse and then analyse the data
o Make an informed decision
o Hold your service provider accountable
If you want to know more or you are seeking a source of information, please contact AXIS on 1800 111 299 or feel free to send me an email at email@example.com.