The billion dollar piggy-bank Australians care little about
As one of Australia’s two million small to medium employers you don’t just look after your employees’ current livelihood – you also contribute to their future retirement.
Superannuation is considered ‘lost’ when a fund is unable to contact the individual and hasn’t received a contribution to an account for five years.
At the end of the last financial year, the ATO revealed that more than 14.8 million Australians have a super fund account and over 40% have more than one account, meaning there is an increasing chance that these accounts have been forgotten and their balances are being eaten away by admin fees.
Additionally, MLC’s Wealth Sentiment Survey of over 2,000 Australians found that 40% of active account holders don’t even know how much they have saved in super.
The fact is Australians aren’t paying enough attention to their superannuation – the one thing that will play a major role in their future financial security.
While there is tight regulation stating that only people who are appropriately qualified and trained can advise employees on superannuation issues, there are still many ways employers can engage their staff with their super piggy bank. Try these today…
1. Start the conversation early
Employers are charged with the responsibility of providing their staff with information about their default employer fund.
For example, at Health Partners - a Statewide Super employer - each new staff member is provided with an employment pack that contains the fund’s Product Disclosure Statement (PDS).
A PDS provides employees with a guide to the super fund, background on how super works, the different types of contributions they can make and fee charges.
It’s your employees’ ‘101 overview’ of how your default fund compares to the funds they already hold accounts with. Then if your employees want a further explanation of the PDS or information about how the default fund differs from others, you can refer them to the fund directly.
2. Point them in the direction of financial education
A key way to engage your staff with superannuation is providing them with the resources to educate themselves.
Many people struggle to understand what super is, how it works and how they can effectively manage their super.
The following websites can help your employees (and you) gain this knowledge and feel empowered.
Statewide Super’s Money 101 site provides short, interactive modules on a variety of money and super-related topics, which can get your staff up to speed on their finances.
You can also direct your staff to Statewide Super to answer their questions by placing a Statewide Super tile on your intranet. This will allow your staff to have their questions answered quickly and easily.
3. Ask your superannuation fund provider to make a presentation to your employees
“Today’s employees are increasingly looking to employers for more than just a job. Monetary rewards are important, but non-monetary rewards and recognition are low-cost tools that companies can use to build and sustain these relationships,” Mick wrote.
“Employers offering workshops that address financial topics can help their employees reduce stress, which could lead to a reduction in absenteeism and turnover.”
“Many people haven’t had the opportunity to learn about credit scores, investments and retirement planning.”
Superannuation funds can conduct information sessions in your work place to assist your employees understand how they can best leverage their super.
For example, at Health Partners a number of training programs have been held by Statewide Super. Staff who are nearing the end of their working life have also participated in the retirement planning seminars.
These seminars provide employees with guidance and general information regarding various issues they should be considering, including how to transition to retirement, investments, retirement options, Centrelink and lifestyle planning.
4. Organise one-on-one sessions
An additional step is to organise one-on-one sessions with employees using the services of a financial specialist from your default superannuation fund.
For example, at Health Partners confidential consultations to discuss the individual’s superannuation have been offered to employees.
These sessions may provide advice on salary sacrificing, the range of investment options offered by the fund, how much investment risk employees are willing to take on, and how to incorporate insurance into your superannuation.
Employees can choose to contribute payments to their super from their before-tax (salary sacrifice) or after-tax income.
Salary sacrifice is where contributions are made on behalf of your employee to their super directly from their before-tax income.
The earlier employees (and you) start to salary sacrifice, the more money they can accumulate in their super for retirement – and the benefits are staggering.
5. Takeaway messages
Superannuation is something all Australians need and something that you as employers are responsible for.
If you or your staff had $20,000 in your pocket, would you hand it over and take no interest in what was done with it? It’s highly unlikely.
Engaging your employees – and yourself – with superannuation will ensure you both have the savings you need to live the way you want to in retirement.
The information provided is of a general nature. It does not consider your specific objectives, financial situation or needs. You should consider the appropriateness of this general advice with regard to your personal circumstances, obtain independent financial advice and consider the applicable Product Disclosure Statement before making an investment decision.
Factual information and general advice may be provided by representatives of Statewide Superannuation Pty Ltd ABN 62 008 099 223 AFSL 234171 as trustee for the Statewide Superannuation Trust ABN 54 145 196 298 (“Statewide Super”). Financial advice (including both personal and general advice) may be provided as follows:
- Statewide Super has engaged Industry Fund Services Limited ABN 54 007 016 195 AFSL 232514 (“IFS”) to facilitate the provision of comprehensive financial advice to members of Statewide Super. Our Financial Planners, Associate Financial Planners, and Member Solutions Advisors based at our Member Centre in Adelaide are Authorised Representatives of IFS. IFS is responsible for any advice given to you by its Authorised Representatives.
- Statewide Super has also accredited a network of financial advisers (“Accredited Advisers”) based locally and regionally. Advice provided to you by these Accredited Advisers will be provided under the Australian Financial Services Licence held by a third party. That third party is responsible for the financial advice given to you by an Accredited Adviser.
Fees may apply. Further information about the cost of financial advice is set out in the relevant Financial Services Guide (“FSG”). Copies of the relevant FSG for Statewide Super is available for download at www.statewide.com.au/financial_planning/financial-planning-team or by calling 1300 65 18 65. A copy of the relevant FSG for an Accredited Adviser can be obtained by contacting the Accredited Adviser directly.