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Priorities in Super

Positive or Negative

Through super, employers effectively fund not only their employees’ current lifestyles, but their future lifestyle in retirement. What started as a 3% contribution in the 90s’s will have escalated to 12% by 1st July 2025.  

While super is a large part of each employee’s remuneration package, most employers do not give enough attention to it as a benefit.  As a result, there are very few occasions where super is being truly optimised at individual account level. 

Super Priorities?

Any employer reading this should stop for a minute and consider what are the tangible measures around the management of their employee’s asset as a remuneration benefit?  In asking this question of employers to date, no one has had an immediate answer to prove that employer super is a priority for someone in each organisation. In fact the opposite was true as most employers relied on their service providers to explain to them how well things are going.  

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

Self-reporting is widely recognised as the worst source of information to assess a supplier’s performance. 

What measures might be best?

The first consideration can be put very simply as “deciding what you need to know”.  This phrase is relevant when deciding whether any company cost is being incurred with an eye for the perfect result.  There is no other product or service provider that an employer would source and then manage the way they do their super providers.

Ideally everyone wants the best quality that money can buy but when most employers choose their super provider, very little attention is paid to the fact that it is a decision that will be a long term choice and one that needs to be successful over time. Most are under-informed about what they are actually buying.  All platforms promise the best of everything:

  • The provision of a product to register changes in a client’s balance
  • Functionality within the product
  • A default investment strategy if the employee does not use the investment choice menu
  • Access to investment markets, globally and by asset class, through an investment choice menu
  • Competitive group insurance policies with no proof of health required
  • Access to a call centre to answer questions
  • Website access to their account
  • Tools available on the product provider’s website
  • Regular publications and notifications and even events

While the list is very standard across different products, there are variations in the quality around what you are actually buying.  There is a commercial saying that “if you are paid to do a job, deliver it”.

False Branding

Every platform in employer super targeting medium to large sized employers promise to either optimise or maximise your employees super. 

The measure that should be used as an overview of performance is projected income in retirement.  The majority of employees remain in the provider’s MySuper Investment Default for far too long, most retain their insurance well into their 50’s and even 60’s and most do not have a valid nomination of beneficiary.  No platform provider has a system of delivering on what they consider a “perfectly serviced account” and most do not provide a framework for the employee to examine their current product’s performance against their peer group.

Most forward thinking platforms have a program of selling and retention, a practice quite distinct from quality servicing and the delivery of personal scaled advice at an individual account level with the intention of optimising an employee’s projected income in retirement.  

If everything observed and said since the Royal Commission in 2018 is meant to change the false service culture of the financial services industry, employers have a major role to play in holding super providers accountable for their management of the accumulated employee asset.

 It’s not easy but it is worthwhile!

I am sure we all have experience in problem solving and change management and we all know how trying it can be.  However, it has to be observed that super is among the worst managed assets in Australia and so many employees own a part of it.  

In an actual tender conducted by AXIS, the following comparison was submitted as one of the perspectives around what was current and what was actually possible if the challenge was properly analysed and understood:

Projected income in retirement – Based on MySuper Default*
  Platform 1 Platform 2 Platform 3 Platform 4
Young $34,000 $33,700 $32,900 $34,700
Middle  $33,400 $33,200 $32,200 $33,200
Old $32,200 $32,000 $30,900 $31,000

TABLE 1

Projected income in retirement – Available from the Investment Choice Menu*

  Platform 1 Platform 2 Platform 3 Platform 4
Young $45,000 $41,200 $43,100 $47,000
Middle  $41,200 $38,700 $40,000 $42,200
Old $31,800 $31,700 $31,500 $30,200

TABLE 2

* The projection is just an estimate, not a guarantee. The actual money you receive in your retirement may be very different from this estimate and can be impacted by a number of factors such as the investment option you choose, investment returns, fees, contribution levels, withdrawals etc. Amounts shown are in today’s dollars and exclude any non-superannuation assets or entitlement to age pension. Current tax and superannuation laws remain unchanged.

Assumptions: https://www.axisfg.com.au/june2020assumptions/

The missed opportunity is quite stark but arguably, as you can now see the numbers, you must ask the question of your current service providers.

On the other hand, feel free to make contact with AXIS Financial Group by email consulting@axisfg.com.au  or FreeCall 1800 111 299 and ask for either Roy or Richard.


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.

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 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