Employers hate superannuation. That is a fact. And I am not simply referring to the requirement to pay the 9 per cent superannuation guarantee (SG) into employees’ accounts. Many employers have been on the receiving end of substandard service offerings from superannuation funds while the Australian electronic payments infrastructure has not evolved to include superannuation payments. The Cooper Review into the superannuation system has the potential to improve employer and consumer engagement with superannuation beyond current levels of recognition. It could also make the increase in the SG more palatable for business. In particular, the SuperStream concept, if implemented, will repair superannuation’s public relations problem with employers.
Research released recently by the Financial Services Council and Ernst & Young shows that an implemented SuperStream infrastructure could save superannuants $20 billion over the next 10 years. It also reveals that while a significant amount of legislative change is required, much can be achieved within the current regulatory structure. This is a damning finding for the superannuation industry. Incredibly, our world-leading retirement income system includes superannuation funds that have not been prepared to accept contributions from employers through electronic means. In part, this has forced many employers to provide superannuation contributions though cheques, despite paying employee salaries online through electronic payment systems.
The use of two completely different payment mechanisms makes superannuation cumbersome and, worst of all, a manual and needlessly slow process in an automated world. The failure of some superannuation funds to provide e-commerce services is an indictment on the superannuation industry itself. Another problem employers face is that every super fund has different payment requirements for accepting contributions. Both are examples of how the superannuation industry must continue to evolve. An industry created by regulation must be more proactive in improving its capacity to deal with its stakeholders. And while the banking industry has leapt forward with greater use of electronic payments, superannuation, the elephant in the room, has been left to contend with cheques and paper.
The national payments infrastructure is now under review from both the Reserve Bank and the industry’s self-regulatory body, the Australian Payment Clearing Association (APCA). There is a braod realisation that the divide between the electronic payment system and superannuation is a poor outcome for all – and particularly bad for employers. The problem is that our payment infrastructure is not currently equipped to manage super contributions. If an integrated payment system is developed, it could revolutionise employer and employee superannuation arrangements. For instance, upon beginning a new job, an employee could provide an employer with simply a BSB and an account number for their super account – just as they do to receive their salary payments.