THE CORPORATE SUPERANNUATION CONSULTANTS Transforming Super Into a Superior Benefit Richard Matsinger
DISCLAIMER The information contained within this presentation is intended to provide general advice only. It has been prepared without taking into account your objectives, financial situation or personal needs. The information is not financial advice and it is not intended that this information be used as a substitute for specific technical, taxation or financial advice. The information provided by AXIS Financial Group (ABN 21 092 889 579, AFSL 233680) within these slides is believed to be current. Changes in Government policy and legislation can dramatically alter the topics covered. This information is a summary based on AXIS' understanding of the relevant legislation. It is only intended to be general advice information. It is general in nature and may not be relevant to individual circumstances. Information in this presentation, 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. AXIS Financial Group | www.axisfg.com.au
Is your Corporate Super a Superior Benefit ?
AREAS TO COVER How the super system works and why it’s broken How traditional super providers do not deliver super in the best interests of your workforce A modern approach How to transform your corporate super plan into a superior benefit AXIS Financial Group | www.axisfg.com.au
THE BROKEN SUPER SYSTEM? WHO’S LOOKING AFTER THE EMPLOYEES INTERESTS AND TRANSFORMING THEIR SUPER INTO A SUPERIOR BENEFIT AXIS Financial Group | www.axisfg.com.au
THE BROKEN SUPER SYSTEM? There is close on $2.5 Trillion with a T, within the superannuation system and it is the second biggest benefit after salary and wages that employers provide to their employees. So how does the system ‘work’? Let’s start with the individual that actually owns the asset, the employee, who is acting in their best interest at the end of the day? On one hand we have the government who takes their slice of the pie in the form of taxes and keeps consistently changing the rules of the game. Then we have the providers, these providers are made up of the Master Trusts which are predominately owned by the banks and AMP, and we all know their main motivation is to generate profit. Along with the master trusts we have the industry funds and again I do question their motives in managing this benefit. Then we have the Employer who is actually providing this benefit as an employer funded employee entitlement and is often swamped by the complexities of the industry. So as I stated at the beginning who is really looking after the best interests of the employee? The one who actually owns the asset. I don’t think it’s the government, I don’t think it’s the providers so whose left? The employer . The employer is not to blame, this is a complex system that lacks transparency, but that is why we are here to explain where the money you as employers are paying actually goes. AXIS Financial Group | www.axisfg.com.au
WHERE DOES THE MONEY GO? AXIS Financial Group | www.axisfg.com.au
WHERE DOES THE MONEY GO? So let’s look at what happens to your contributions – all these aspects on the screen have a major difference over a lifetime of the asset and impacts an employee’s annual income in retirement, which is something the majority of us worry about. Its actually the top financial concern of employees – not having enough money to retire. There have been many studies completed around financial wellbeing and financial stress in the workplace and the correlation this has with decreased productivity and work efficiency is damaging to an employer’s outputs. Having a superior superannuation arrangement can aid in reducing employee’s financial pressures as well as being used as a to ol to not only motivate current employees, but to retain and attract key talent in this competitive work environment. All in all, a huge COST if it is not managed properly. So, you pay the contribution, from there the government takes their slice, and the balance is then directed to the employees super account within an administration platform. From there, a range of fees are taken to administer the employee’s account and premiums are deducted to fund insurance cover. So by the time you get to the net contribution in some cases the employee has less than 50% of the total contribution invested due to excessive fees and incorrect insurance design. But that’s not all – the monies are then invested which incurs investment fees and we can’t forget investment performance. Which is something all the providers like to tell us is above board and their strategies will deliver the best long term returns. But how do you know? At the end of the day there is no accountability within the system, maybe because it’s so complicated bu t t hat’s why we are here . AXIS Financial Group | www.axisfg.com.au
AXIS CORPORATE SUPERANNUATION CONSULTANTS AXIS Financial Group | www.axisfg.com.au
AXIS CORPORATE SUPERANNUATION CONSULTANTS So who are we and why do we do what we do and how can we help you? I’m Richard Matsinger, a partner of AXIS Financial Group, which has been around for 25 years – we live and breathe corporate superannuation. We are the corporate superannuation consultants. With the ever changing superannuation environment we have constantly innovated our model and strategies to ensure that we are always acting in the best interests of our employer clients. We hold our own AFSL and have no financial ties with any product providers which means that we are always working for you and your employees. So why do we do this? Because we care about you as employers and your employees and we know the monetary and psychological difference a quality default superannuation arrangement can have to your workforce. At the end of the day we work for you, not a provider. We don’t care which product you have in place and we don’t have a preference for what we recommend. As long as it’s the best option for you and your workforce. We are all about keeping the players in the industry honest because as it stands there are little questions being asked of these providers. I mean just recently in the Financial Review superannuation providers had to refund $21M back to members for services that were never delivered. We consult over 50 employers, 20,000 employees with a combined asset of approximately $2 Billion. You can see on the screen that we work with a range of quality national employers who have all realised the importance of superannuation as a superior benefit and the important role it plays. I will go through a few examples later in the presentation that might resonate with a few of you. AXIS Financial Group | www.axisfg.com.au
TRADITIONAL MODEL RESULT LACK OF PENETRATION, VALUE & ACCOUNTABILITY AXIS Financial Group | www.axisfg.com.au
TRADITIONAL MODEL So what is the traditional model and why doesn’t it help generate a superior benefit? Firstly, as I mentioned the superannuation system has been around for 25 years with little to no innovation. So what are the consequences of this? First we have poorly structured insurance arrangements where there is very little creativity in managing insurances based on age and lifestyle demographics. What do I mean by this? A young employee who has just started in the workforce should have little insurance – they have no debt and no dependants and should be using the majority of their contributions to reach a critical mass not paying for insurance premiums. In comparison to a middle aged employee who has a mortgage and dependants where insurance plays a massive role as a security plan just in case the worst happens. Then there is the employee who is close to retirement, they are an empty nester with no mortgage and have accumulated enough wealth to support their family – what’s the point of them using their valuable retirement benefit to pay for insurance that is not needed. Do you know how much insurance cover you have, how much you are paying and how much you actually need? I’m not saying that everyone over the age of 50 should go out and cancel their insurances, but it’s something to think about. AXIS Financial Group | www.axisfg.com.au
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