When you run a business or make business decisions on someone else’s behalf, you have a lot or responsibilities. So you might not have much time to think about your employees’ super. And after all, what matters most is that it’s easy to administer, right? Wrong.
What you really need to think about is doing the right thing by your employees. Which is why you need to choose a default fund that puts them first. Industry SuperFunds do exactly that. But who are the bank-owned super funds run to profit?
It’s pretty obvious, really. Banks run their super funds to generate profits which are used to pay dividends to shareholders. Industry SuperFunds, on the other hand, exist only to benefit their members. No one else. That’s why they keep their fees low. Importantly, on average they have also delivered better long-term results than the average retail fund (the kind owned by the banks).
While most employers want to do the right thing, sometimes an offer from the bank to switch to their super product can seem tempting. But just remember your staff are relying on you to look out for their interests, not the banks.
So if your bank approaches you with one of those offers, never forget that while banks are many things, they’re not super. When it comes to something as important to your staff’s super, makes sure you keep it in good hands with an Industry SuperFund.
For more information watch this video.
Looking after your employees is good for business
BOSS (KEVIN): When you run a business, you have a lot of responsibilities.
WORKER 1 (Roy): Morning Kevin
KEVIN: Morning Roy
KEVIN: I’ll call you back mate.
KEVIN: But something you don’t often think about is your employees’ super. So long as it’s easy to administer, that’s all that matters, right? Wrong. It’s about doing the right thing by your employees. That’s why my guys are with an Industry SuperFund – me too. Nice work, Jane.
WORKER 2 (Jane): Thanks Kevin.
KEVIN: They know they’re better off with an Industry SuperFund… because they’re run only to profit members, like them, and on average have also delivered better long-term results than the average retail fund. But with all this talk about the banks trying to get their hands on people’s super… well, my employees don’t want that to happen to their hard earned, so they told me to keep their super in good hands. So now, if the bank offered to help me shift the workplace super to their super fund, I could say with confidence, ‘no thanks’.
SECRETARY: Mr Bloggs from the bank is here to see you, Kevin.
KEVIN: …it’s not about you or me.
BANKER (MR BLOGGS): No…?
KEVIN: No, it’s about doing the right thing by my employees. It’s the least they deserve. And we all know keeping them happy is also good for business. Plus it’s one less hassle for me. And after all, banks aren’t super, are they? So stick with an Industry SuperFund. And keep your super – and theirs – in good hands.
Don't be fooled - Banks aren't super
HELEN (EMPLOYER): The other day I got a visit from my bank. ‘So Bob, what can I do for the bank?’ I asked.
‘I’ve got a few ideas for you’ he said, I knew where he was going. I mean, he tried to sell me their super product last time. If I shifted my employees’ default super over to the bank, they’d look after me. So when he tried it on again, I beat him to it and told him ‘this better not be about shifting my staff’s super’. I could see he didn’t want to let it go. So I told him ‘it’s not about me’, and it’s certainly not about helping the bank increase their profits. ‘No?’ he asked, he really didn’t get it, so I said ‘No. My staff want to be with an Industry SuperFund’, I mean they’re run only to profit members, where do the banks’ profits go? He went silent. But it’s not rocket science. Of course I knew banks run their super funds to generate profits which are used to pay dividends to shareholders. And then I thought to myself, the icing on the cake is that the average Industry SuperFund has actually outperformed the average retail fund over the past 10 years, so why would I switch to a bank owned super fund anyway? After that, we didn’t have much more to talk about so he packed up and left. I like Bob, he’s helped me out in the past, but I know when it comes to super my staff are better off with an Industry SuperFund. And that’s where they want to be, so I made sure my employees’ super stayed in good hands. Because we all know, banks aren’t super. And I can’t be fooled…well, not that easy.
Banks aren't super
HELEN (EMPLOYER): So Bob, what can I do for the bank?
BOB (BANKER): I’ve got a few ideas.
HELEN: I hope this isn’t about shifting our staff’s super?
BOB: Well i've...
HELEN: It's not about you or me.
HELEN: No. They’re after a fund that’s about them.
ANNOUNCER: Banks aren’t super. So keep your super in good hands.
THINGS YOU MAY NOT KNOW ABOUT BANK-OWNED SUPER FUNDS
- The big banks are behind lots of the big retail super funds. For example: BT Super is owned by Westpac, MLC is owned by NAB, Colonial First State is owned by Commonwealth Bank, OnePath is owned by ANZ Bank.
- Banks run their super funds to generate profits which are used to pay dividends to shareholders.
- While the banks behind retail superannuation funds have regularly made enormous profits themselves, over the last 10 years the average retail fund has delivered around $16,000 less to their members than the average Industry SuperFund*.
- Despite recent rule changes banning commissions, some types of commissions are still allowed; meaning some financial planners employed by retail or bank owned super funds may continue to receive commissions from clients, even under the changes. If a financial planner has ever recommended a retail or bank owned super fund to you, you should ask them if they are still earning commissions from you and whether you would be better off shifting into commission free arrangements.
Consider a fund's PDS and your objectives, financial situation and needs, which are not accounted for in this information before making an investment decision.
* Past performance is not a reliable indicator of future performance. Assumes starting balance of $50,000 and initial salary of $50,000. Comparisons modelled by SuperRatings, commissioned by ISA. Modelled outcome shows 10 year average difference in net benefit of the main balanced options of 15 Industry SuperFunds and the 79 retail funds tracked by SuperRatings, with a 10 year performance history, taking into account historical earnings and fees – excluding contribution, entry, exit and additional advisor fees – of main balanced options. Outcomes vary between individual funds. Modelling as at 30 June 2014. See www.industrysuper.com/assumptions for more details about modelling calculations and assumptions. ISA Pty Ltd ABN 72 158 563 270 Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514.