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What you should know about employer super

The Traditional Sales Model

Employer super has been a challenge for almost three decades. Almost every party involved is not managing it as well as they could be, or simply doing it badly. Whether you’re an employer, a regulator, a platform, an adviser, an employer or an employee, no one appears to be operating with the right service model to optimise everyone’s individual asset.   

That sounds like a damning indictment of every party involved with employer super but it is not intended to be.  There are many individuals who have been involved in developing some sort of service model for employer super but unfortunately every current service model being applied to employer super is seriously deficient in optimising the value of each individual’s asset. 

Change & Improvement Management

Commercially, fewer people than you think know how to manage change for improvement, especially when it comes to large, complex assets like super.  Under current service offerings around employer super, employers can change platforms but, in truth, there is no change in the overall outcomes being delivered.  Tender consultants will happily conduct a tender and change your product provider but the employer has not usually fully identified what improvements should be expected from the change.

All product providers market their branded solution around employer super as being the best solution.  Unfortunately super is an issue that everyone has an opinion on.  As a consequence, the public can be both misled and misinformed about which product option is actually “market leading” and which service options actually deliver a measurable value.  

Each entity with an involvement in delivering beneficial services around employer super are not transparent about where the product and service model fall short.

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The Current Preferred Model for Employer Super

Through the Royal Commission, super has been through yet another examination of the value provided by the various service options broadly available from the market.  Everyone has an opinion about what needs to be done:

  • Once again the government is blaming the financial services industry, the assumption being that their regulatory effort since 1992 around super has been effective.  Evidence suggests that government re-regulation of super has actually been ineffective as, on the basis of remediation paid, it appears nothing has improved since its introduction in 1992.  The government’s understanding of super as regulatory or possibly political.  The future employer super model should be centred on a standardised service model based upon a default MySuper investment option 
  • Product providers have dominated the market for more than two decades and evidence currently indicates they want to continue to supply a product solution to the market.  Common sense would say that if you have a problem and continue to deliver the same definition of service, you might find you have the same problem?
  • Historically, every product provider is owned by a much larger organisation: so government, banks and unions.  The financial services industry is being restructured with a raft of mergers and acquisitions affecting all segments
  • The current service model continues to be product based.  All product providers advertise their market brand in winning and retaining their revenue.  All product providers within employer super are equally strong on product functionality but all product providers are all weak on service
  • The public has been convinced there are two considerations in their selection, one being cost and the other being the annual investment return as advertised by the media
  • As a consequence of their size and position, the government and all product providers are all inclined to politically explain what the problem is with employer super and how they will improve management of super as a personal asset from there
  • As a consequence of their market domination, new regulation is passed to mask the fact that their actions from the Royal Commission do not in fact present an improvement in the value being delivered at individual account level

 Super is an employer funded employee entitlement and enlightened employers are now realising it can be seen as a dead cost and a future problem through their duty of care or indeed, to date, it has been a missed opportunity in managing what is a major cost to the business and an employee benefit of significance.

Vested Interests

The future of employer super is not clear to anyone.  For medium to large size employers, super is an important remuneration benefit and a differentiator, if properly managed, as an employee wealth creation scheme.  

Not all product service models are the same and yet, in terms of product, there are obvious similar features in terms of functionality but always major differences in the true value being delivered through the quality of their servicing.  Every employer has an obligation to understand the difference between service activity and whether or not value is being delivered to an employee’s account balance.

Decisions Based Upon Information

Any manager needs to be sure of their decision making capability.  The quality of outcomes is enhanced by making decisions based on knowledge and not someone else’s information.  The difference between information and knowledge is surely based on evidence and being careful to recognise the opinion of vested interests. 

Should you want to have a deeper examination of your employee super benefit, please feel free to look through our website www.axisfg.com.au or call us on 1800 111 299 or email us at consulting@axisfg.com.au

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.

Let’s talk about the right super fit for your employees.

Testimonials

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