Employees who make choices about their super have better financial and retirement outcomes than those who don’t. And employers who actively help their employees engage with their super are providing a benefit their employees really value. Is it possible that everyone might win with the right workplace super solution?
Your super – your money
Every Australian who works contributes to super, but very few of us think about it, let alone make conscious choices about managing it. Over 80% of employees invest their super in their employer’s default fund, and have no idea about the underlying investment and portfolio choices made on their behalf. Which is a shame, because research on our workplace super book shows that employees who make choices about their super have far better financial and retirement outcomes than those who don’t, regardless of the choices they make.
It’s a stark reminder that engagement is key when it comes to super. Too many Australians seem not to focus on the fact that their super is actually their money – they just can’t spend it right now.
The challenge for employers
At issue for employers is the question of how best to help their employees engage with super so that they understand that taking an active interest now will lead to better financial outcomes down the track.
And that’s where the HR director comes in. Because responsibility for the administration of super typically falls on the HR department, it is particularly important that the HR director take a holistic view of his/her responsibilities. This means treating super not as an administrative burden, but as a way to increase engagement with employees and provide a benefit they value.
In fact it’s something that employees are asking for. According Steve Black, research
confirms IOOF’s experience that an increasing number of employees are actively asking their employer for professional financial advice on their super – which highlights the value advisers can bring to the financial wellbeing of both employers and employees.
A financial adviser can give employees richer insights into their super plan, as well as any attached add-ons, such as insurance, which they may not be able to discover on their own, or through their HR department or employer. Where needed, they can also offer personalised financial advice and a plan outside of super.
Adviser-led workplace super – the key to better outcomes
Black says that one option employers should consider is to partner with a workplace super partner, led by an active financial adviser.
Super administration and compliance is constantly changing, and most employers would prefer to focus on running their business rather than managing super. The right adviser with the right workplace super plan makes super administration easier and less onerous for employers. At the same time, a workplace super partner can significantly reduce the work associated with super for the employer, streamlining the management of their obligations and saving time and money.
It’s a view reinforced by Paul Mann, managing director of Moneywise Global, who says that many people don’t understand that super is their long-term financial plan, and the advantage of an adviser is that they can encourage employees to engage with their super and recognise how it can help them achieve their goals.
There are other benefits as well. The link between financial stress, mental health and productivity at work is well documented. In fact, PWC research shows that 45% of employees under the age of 45 say financial matters cause them the most stress in their lives and 17% of employees say that financial stress impacts their productivity at work.
Mann confirms that research has also proven that having financial advice reduces employee stress in the workplace, which creates substantial knock-on benefits for employers.
He says that employees who have access to financial advice on their super at work are less stressed about their finances and therefore more focused and productive at work. For employers, the gains in productivity translate directly into better bottom line results – something all employers would be happy to see happen.
For further information on how you can integrate adviser-led super solutions into your workplace, please visit: ioof.com.au/employer_super
Roy Morgan Research (‘Discover your edge’)