Choice of fund unsatisfactory
Close to 60 per cent of medium to large businesses find their choice of fund process cumbersome and costly due to the labour intensive tasks involved, according to a joint survey by super clearing service specialist SuperChoice and The Association for Payroll Specialists (TAPS).
The research comes at a time when the Federal Government is focused on reducing employer costs and burdensome administration tasks that are required to meet superannuation guarantee and choice obligations.
The survey identified the key issues for improving superannuation choice processes as standardising remittance and reporting formats for all choice transactions, electronic funds transfer (EFT) as a mandatory payment method and the prompt return of rejected payments to employers
SuperChoice chief executive officer Peter Philip said employers were spending tens of thousands of dollars annually to administer choice, with particularly high impacts for employers with large numbers of employees and/or with high staff turnover.
“Medium to large businesses are spending $25 per employee annually to administer choice — this relates to both the human resource and non human costs of administering and delivering the payments,” he said.
“We were greatly encouraged by the fact employers using clearing services more than halved their cost and time associated with superannuation choice administration. We think this time and cost saving can go a long way further as scale and efficiency increase,” he said.
TAPs general manager Jason Low said: “We realise there’s an argument that the human resource cost is a sunk cost, but tell that to the payroll managers who get in at 7am and stay back till 7pm to process cheques to 50 super funds with different requirements and formats,” he said.
According to Low, there were some straightforward things for the Government to work on almost immediately.
“The idea that a large number of super funds want employers to register with them because one employee chooses the fund is a very significant time-waster for payroll. If the Government really wants to cut red-tape for business, this needs to go.”
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
