Scheme Restructuring
Organisations with existing superannuation schemes are looking to remove the complexity and cost from their existing arrangements. They are also looking to improve the design and attractiveness of their schemes, to modernise them and to align them with their corporate objectives.
This is particularly true of their remuneration and human resourcing objectives. Employers want their superannuation schemes to make a positive contribution to employees' perceptions of the organisation, and not to be a liability and a legacy of the past.
Organisations which are establishing new schemes or replacement schemes are avoiding the drawbacks of outdated arrangements. They are implementing straightforward benefit designs which are simple to understand and appreciate, and which match the remuneration and human resourcing policies of their organisations. They are also avoiding the high-cost and high-compliance structures of the past, and ensuring that their management time is spent on productive endeavours and not on endless meetings and actuarial reports.
National Benefits has the knowledge, expertise and industry standing to effectively restructure your existing superannuation arrangements, and to put in place new arrangements which reflect modern employment practice. The advent of flexible compensation and fully costed remuneration means that superannuation schemes today need to be more versatile in how they relate to other components of the remuneration system, and to have benefit designs which are less convoluted and more transparent. If you have an existing scheme, or you are contemplating the introduction of a new scheme or a replacement scheme, then a benefit structure can be designed for you which meets your organisation's expectations for superannuation.
Master Trust vs. Stand-Alone Scheme
A relatively newer form of superannuation which has emerged in the market in recent years, and one which provides real options for employers, is the master trust. This is a superannuation scheme which is operated by a market provider such as a life insurance company or an investment manager, and which provides a way of completely outsourcing an organisation's superannuation arrangements, including trusteeship. This type of structure enables organisations to capture economies of scale in investment and administration which may not otherwise be available. Master trusts also enable organisations to avoid most of the responsibilities for legal compliance which attach to separately-registered schemes operated by employers, and to benefit from much reduced compliance costs.
Some organisations with existing stand-alone schemes prefer to retain this type of structure rather than move to a master trust arrangement. However, they still want the advantages of a modern benefit design, and one which removes unnecessary complexities and costs. This can be achieved through a review of benefit design, and by a review of each of the components which make up the scheme. These include scheme administration, investment management, investment strategy, group life and disability insurance, and member communications.
Reviewing Existing Arrangements
The need for an organisation to review and possibly restructure its existing superannuation arrangements arises for a number of reasons. These include:
- The current scheme has been in existence for many years and its design has not kept pace with the changing employment market.
- The organisation itself has restructured significantly in recent years, and is now quite unlike the organisation of old.
- The ownership of the organisation has changed, and the corporate culture has changed with it.
- The organisation has introduced a total-cost remuneration system, and the vesting rights of the scheme make it very difficult to value the employer's input.
- The organisation has introduced flexible compensation, and the scheme's trust deed does not allow contribution rates to be varied or suspended.
- The number and percentage of staff who are members of the scheme has fallen considerably over the years, and it is no longer economic to have a stand-alone scheme.
- The scheme provides insured death and disability benefits, but management would like to offer these benefits to all employees, not just scheme members.
- The design of the scheme is so complicated that it is difficult to communicate its benefits to employees.
- The scheme is of the defined benefit type, and the organisation cannot risk its required contribution rate spiralling out of control.
- The organisation does not have a current scheme at all, but management feels that it should use its buying power to establish a scheme so that employees can save for their retirement.
Further Information
If you feel that your organisation could benefit from an independent review and possible restructuring of its existing superannuation arrangements, or if you are contemplating the introduction of a new scheme, please contact us.
If you are not sure of whether a review is appropriate in your circumstances, or if you would like some indication of the prospective benefits of a review, we can assess your existing arrangements and advise you of the best course of action.