Superannuation - an untapped employee benefit

It’s simple – build it and they will come. Flexible working? Gym membership? Free quinoa salad bowls for lunch? A parking spot? High-quality superannuation?

 

How to attract high-quality employees

When it comes to offering extra benefits to ensure you attract and retain the best workers in the market, it can be tough for high-quality superannuation funds to compete with the instant hit of free gym membership, or a half day off every month. Especially since most employers view superannuation as an obligation, rather than an opportunity to add real value for employees.

But the reality is that smart, desirable employees – the kind you want – will respond to the availability of an excellent default super fund (sometimes called an employer super fund), once they truly understand its benefits.

Why do you need a good default super fund?

As the population ages and national debt mounts, there is genuine concern over how the government Age Pension might be affected in coming decades, and that means superannuation is back in the spotlight.

There is debate over the increase of compulsory super from 9.5% to 12% in coming years, and questions over allowing younger generations access to their super for assistance in getting on the housing ladder.

But Australians have absorbed the message that regular super contributions could be the best way to ensure their future security, and that a well-managed super fund is key to that.

What it means for employers

From an employer’s point of view, superannuation is not just an obligation but an untapped opportunity that may support employee acquisition, retention and productivity.

What defines a good default super fund? Some of the things employers should be looking for include competitive returns for employees, reasonable fees, added benefits such as financial education, and, importantly, financial peace of mind for your employees.

Superannuation is something you should be talking to your new, existing and departing employees about. According to the Australian Tax Office (ATO), 36% of the population has more than one super account, often creating new accounts every time they start with a new employer. Their hard-earned money may be eroded by multiple sets of fees and multiple insurance policies. The ATO also has over $20.8 billion in lost and unclaimed super belonging to people across Australia, some of which may belong to your employees.

Superannuation is part of an employee’s total remuneration. Encouraging them be more engaged will help them take control of their financial future and has even been shown to boost employee satisfaction ratings.

Supporting employees helps employers, too

An employee living without financial stress is logically more useful to an employer than one who is distracted by debt and financial insecurity concerns. A distracted employee is not a productive one, with worry and anxiety undermining performance and morale. Research shows that employees spend an average of 3.6 hours a week worrying about finances at work,¹ costing employers an average of $4,613 per employee per year.²

Finances are of course, a personal matter, and no employee wants to be lectured on their personal money management. This is where external experts can help. Some super funds can help employers play a role in educating their staff by offering tailored financial education programs in the workplace to suit all employees.

How does salary sacrifice work?

Even if you do offer salary sacrifice to your employees, there’s a good chance that a lot of your workforce don’t understand the benefits.

Salary sacrifice is when an employee chooses to "sacrifice" a limited portion of their pre-tax salary or wages directly into super contributions, rather than receiving that money in their pay packet. The employer then pays the sacrificed amount to the employee's super fund. The amount paid is on top of your compulsory super contribution as an employer.

This may allow the employee to reduce their taxable income, grow their superannuation savings and potentially avoid the Medicare levy on the sacrificed portion of their salary. And small amounts can make a big difference. Thanks to the magic of compound interest, contributing just $20 per week for 30 years could result in an extra $85,000 in retirement savings – and only $30,000 came from their own pocket.³

Helping employees understand and take full advantage of benefits such as these will have a tangible impact on their current and future financial wellbeing.

Invest in your staff with QSuper financial wellbeing workshops

QSuper offers a range of financial wellbeing seminars aimed at helping your staff take control of their financial future. These on-demand session can be accessed at any time and are offered at no additional cost to employers and can be structured specifically to the needs of your team. Learn more here 

Some of the topics covered in financial literacy seminars include:

• Managing your super online: How to consolidate super, make changes to insurance, view and change your investments and access online advice.
• Growing your super: Offering simple tactics that could help make all the difference to your employees’ super across the decades.
• Financial wellbeing for women: Women can spend more time out of the workforce than men raising children, for example, and this impacts on retirement security. This topic offers strategies for women to grow their super.
• Understanding your insurance: Adequate insurance is important, and this seminar highlights the importance of personal insurance, some of the enhancements to QSuper’s insurance cover, and how you can personalise your cover to meet your needs.
• Transition to retirement: Tips for employees aged 55-plus who are thinking about working less and easing into retirement. How to boost your super or your income with some clever tax strategies.
• First Home Super Saver Scheme (FHSSS): For first home buyers working hard to save a deposit, this session provides an introduction to how the FHSSS works, including eligibility requirements, contribution limits and how to access funds from super.

In the 2019-20 financial year, QSuper held 820 workplace seminars throughout Queensland with over 19,800 members attending.

Offer it and they will come

Rather than thinking about superannuation as an obligation, instead it may offer an untapped opportunity to support employee acquisition, retention and productivity.

From salary sacrifice, to education, to providing employees with a default fund that you know is working hard for its members, you are creating an environment that will appeal to desirable potential employees as well as support existing employees.

 

 

---

1. QSuper Financial Wellbeing in the Workplace Report, August 2019

2. The Financial fitness of working Australians, Map my plan, November 2016.

3. These figures are illustrative only and were calculated using the MoneySmart calculator www.moneysmart.gov.au (accessed 9 May 2019). The calculation assumes savings of $20 per week for a time period of 30 years, interest compounds monthly, earnings are reinvested and fully credited at the end of each month, and provides an estimate of the future value of savings, which could vary significantly over time if any change is made to these assumptions. The interest rate assumed is 6% p.a. and is net of fees and taxes. The information should not be used as a guide to future performance of any investment. Investment returns can be positive or negative and this does not guarantee a future outcome. The total saved does not take inflation into account. Check with your chosen savings product provider in regard to actual interest calculations. These figures are provided only to demonstrate the principle of compounding. They are not intended to represent projected returns in a QSuper Accumulation account.