Companies involved in servicing the corporate super market have taken a beating in the past few years and, broadly speaking, super has been a controversial subject since its introduction. One would hope that at least some of the criticism might not be justified but unfortunately it’s easy to agree with most of the criticism. It’s harder to agree with the solutions being applied to super problems however.
Let’s start by simply bullet pointing the problem with workplace super:
While super is a truly significant part of any employee’s financial package, all employers tend to shelve it as non-core business and no employer actually has an internal specialist to properly manage superannuation as a primary employee benefit.
In short, most employers fail to exercise a proper duty of care in managing super as a remuneration benefit.
In servicing workplace super, the financial services industry looks more complicated than it is. In terms of major players around workplace super, there aren’t that many. Smaller players, usually industry funds, tend to have their place in servicing workplace super because of modern awards legislation, appropriate to workplace environments involving enterprise bargaining agreements.
There appears to be a high dependency on workplace super within the master trust sales model, so the likes of AMP, CFS, MLC, IOOF and ANZ platforms. The master trust sales model tends to have a preference for revenue being generated from financial planning. While some industry funds do have a platform for workplace super, such as Australian Super Select or Sunsuper for Life Business, it would appear they see little place for workplace super as a long term viable market segment.
What has been noticeable since compulsory super was introduced back in 1992, for all the regulation and reregulation, super still seems to be just as controversial.
Every subsequent investigation has identified new issues but none has ever fixed whatever the problem is. Noticeably the government and the regulator always have an inward looking focus examining industry practices with little outward attention probing the quality of the value being delivered to each individual employee, who are the people who actually own the asset.
As an employer, if you are not properly managing super as a remuneration benefit, the consequences will be apparent:
Workplace super is far from transparent and most employers are somewhat reluctant to get involved in asking the right questions, partly because their current platform provider will not answer intelligent questions. Large entities have a very well developed sales strategy and once they have you as a client, their retention strategy just takes over.
Apart from knowing which questions to ask, you have to have a methodology to analyse the answers and then an understanding of what other product or service options are available if you are to sell super as a superior employer funded employee entitlement to your workforce. Such an analysis would include an examination of sales models for a variety of products, such that you have an increased understanding of what you are effectively paying for, whether directly or indirectly.
You’ll also need to then examine if you have a problem worth fixing and what your options are for improving the delivery of value to your employees.
As a consequence of this straightforward examination of what is a difficult remuneration benefit to manage, you will also better understand how to monitor the delivery of value and therefore hold your service providers accountable for the delivery of said value.
AXIS Financial Group operates under its own Australian Financial Services Licence (No. 233680). AXIS understands the significant benefit to be delivered to your workforce based upon super as an employee benefit, especially as a statement of employer care for the financial wellbeing of each employee.
In managing what eventually becomes the retirement income for each employee, AXIS operates a three step process:
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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.