AMP faces pressure on corporate super

At least four corporate superannuation clients of AMP Limited have started the process of testing the market for new default superannuation fund providers.

One of AMP’s largest corporate superannuation clients, Australia Post was in early April reported to be considering its future arrangements with AMP after facing pressure from unions representing its employees, including the Communications Workers Union.

That pressure followed AMP’s appearance at the first round of hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and subsequent revelations during hearings focused on superannuation and insurance have contributed to client concerns.

Related News:

Money Management has been told that a further three corporate fund clients of AMP were also reviewing their arrangements.

The reviews come despite AMP announcing in late July that it was it was reducing a range of fees within its superannuation business as part of its strategy to “reset the business”.

Sitting at the heart of the AMP fee changes were reductions to its flagship MySuper products set to come into effect in the third quarter of the current financial year.

The reviews being undertaken by AMP’s corporate superannuation clients also come as the Royal Commission has posed the question of whether superannuation licensees should be prohibited from engaging an associated entity as the fund’s group life insurer – something which would have a significant impact on AMP life insurance business.

 




Related Content

Govt canvasses raising minimum super default insurance levels

The Federal Government has directly canvassed lifting the default level of insurance cover included in MySuper products, including with respect to Tot...Read more

We were right to sell AMP Life says Murray

AMP Limited’s financial results and the actions of other owners of life insurance businesses have validated the company’s decision to sell its lif...Read more

Govt will pay unpaid FOS determinations

The Government delivered few financial services surprises in the Federal Budget, but did announce that it would be providing $30.7 million to pay comp...Read more

Author

Comments

Comments

Interesting that pressure is being put on Employer groups via the Unions (supposedly representing the employees best interests) to consider current Group Super/MySuper arrangements.
From my many years of experience working in the Group super space, pricing solutions(ICR's/MER's) have always needed to be very sharp in order to compete on a tender basis. The fact that some of these large Corporate plans in fact have lower costs associated with them as compared to all the big Industry fund and MySuper players, has been a thorn in the side of Industry Funds (ISA) own vertically integrated model. It is galling to see the opportunistic outcomes emanating from RC etc, for these Industry Funds to be making a play for even more AUM/FUM on the back of Fee for No Service headlines. Members of large Corporate super funds typically do not actually get charged any fees for Adviser Services, and in the event that they seek out personalised advice, then the relevant Advice process is initiated, with the member being able to negotiate explicit fees for any Personal advice being provided, with a suitably qualified Financial Planner. Also of note, is that the Group Life Insurance arrangements (whether it be default cover or fully underwritten) provided through the platform, is in nearly 100% of cases, much less expensive than any Retail or Industry Fund comparisons, on a like for like basis.
Maybe the Regulator really does need to do a "Compare the Pair" analysis, based on real facts, rather than rely on very flawed generalisations that seem to have skewed/hijacked by the attention grabbing headlines/advertising (eg Fox in the Henhouse!!).
As an Adviser with nearly 30 years experience, I am bracing myself for the challenges ahead and will continue to try and provide quality service to clients, but all that I wish for is a "level" playing field, where compliance requirements are standardised for all participants (Industry Funds included).

Add new comment