Members urged to look before they leap
Super fund members opting to remain in employer funds, despite now having the freedom to transfer to other funds, stand to retire with up to 34 per cent more super than they would from a retail fund, according to Melbourne-based consultant firm, the Heron Partnership.
According to the superannuation advisory group, corporate super has little to fear from ‘choice of fund’ as it suggests “the vast majority of members will see the sense in remaining with the buying power of their employer’s fund”.
The news, however, is unlikely to stem the ongoing industry trend towards corporations disbanding their super fund and rolling fund members and assets into other vehicles on the market.
The research released by Heron may dissuade some businesses from moving to an outsourced arrangement along with persuading some members from transferring to retail offerings, as the Melbourne firm argues members in an employer-sponsored fund will be substantially better off over opting for a personal retail fund.
“As an example, the retirement benefit for an employee in a small to medium business company fund — with 30 years to retirement — will have 25 per cent more at retirement if he/she stays with the company fund rather than move to a personal retail fund,” Heron Partnership managing director Christopher Butler says.
According to Butler, this same person, if employed in a large company, will be 34 per cent better off due to the greater ‘buying power’ of his employer.
However Butler says ‘choice’ combined with the further announced regulatory changes, will increase moves to outsourcing as companies re-think the provision of superannuation for their employees.
“The push for companies to outsource super continues to gain strength. [With] the move by companies to outsource driven by complexity, regulatory provisions, cost and the simple desire to improve services provided to their employees,” Butler says.
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