Wild swings in share markets

The last six weeks to 31 October 2008 have seen an extraordinary period in investment markets with a large sell-off in share prices around the world...

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legalsuper advocating for reform on your behalf

Superannuation is a complex and dynamic environment and from time to time changes occur that impacts for our members...

Investment manager fees constitute more than half a super fund’s costs

You may be surprised to hear that the majority of your super fund fees are made up of investment manager fees...

Consolidate multiple super accounts

Did you know that Australians on average have super in three super funds?

Cosy super deals do some employees a disservice

Did you know that in certain situations your super fees can automatically increase when you change jobs?

Discounted Health Insurance for legalsuper members

legalsuper has negotiated a highly-competitive health insurance offer for members with nib, one of Australia's fastest growing health funds...

Wild swings in share markets

legalsuper advocating for reform on your behalf

Superannuation is a complex and dynamic environment and from time to time changes occur that impacts for our members.

legalsuper takes an active approach by highlighting these issues directly with our members and to the legal profession more broadly in the media.  We advocate for reform where we see the potential for these issues to disadvantage our members.

One recent example was the laws around salary sacrificing. Many members may not realise that the existing laws allow scope for ambiguity and in some circumstances, can be interpreted and applied by employers to the serious disadvantage of employees often without them knowing.

We have drawn media attention to this issue and penned opinion pieces which have appeared in mainstream media and industry journals, calling for reform.

Over the last two years legalsuper has publicly advocated for reform on eight different superannuation issues, including the high cost of investment manager fees and the potential for pit falls of corporate deals between super fund and employers, both of which we cover in this edition of e-news (see articles 3 and 4). We have also presented our views to industry bodies and forums as appropriate in addition to bringing these issues to the attention of members of the legal profession through newsletters, presentations and events.

In the last two years legalsuper has contributed over 100 public comments on superannuation in the media.

Investment manager fees constitute more than half a super fund’s costs

You may be surprised to hear that the majority of your super fund fees are made up of investment manager fees.

Investment managers are employed by super funds to manage the assets of their members. Most funds employ a number of investment managers to increase diversification. legalsuper currently employs 30 investment managers across its 11 investment options.

Investment managers don’t come cheaply.  Across the Australian industry, investment managers currently reap billions each year from super funds - as much as $7 billion annually, given the $1 trillion in super assets invested and the 0.7 per cent investment fee for a typical default super fund’s investment option.

For legalsuper, investment manager fees make up more than half the costs we charge our members – in fact 58 per cent of our total fees.

Surprisingly, in many cases, investment managers charge the same fee regardless of how they perform and also charge fees as a percentage of funds under management, as opposed to a fee for service. This fee approach seems even less fair when you consider that any one investment manager can provide the same or very similar investment products to multiple super funds, all the while charging each super fund a fee that is a percentage of funds under management.

Superannuation Minister Nick Sherry has been calling for an inquiry into super fund fees. If such an inquiry were to take place, legalsuper believes it should apply a significant amount of attention to the investment management industry from where the majority of costs come.

legalsuper has been raising this issue publicly and will continue to draw attention to the need for any future inquiry into fees to spend considerable time examining investment manager fees.

Consolidate multiple super accounts

Did you know that Australians on average have super in three super funds?

Some members fall into this category simply through the process of changing employers and not rolling their existing super over to their new fund (if they change fund when they change job).

Some members may think that keeping multiple super funds is part of a do-it-yourself diversification strategy. However, this ignores the fact that most super funds, legalsuper included, already provide diversification through multiple investment managers.

If you have super with multiple funds you’re paying multiple lots of fees. That means less money for you and more for the super funds.

Multiple funds can also result in you losing touch with some of your super and becoming a ‘lost member’. If that happens, your super fund may place your account into an eligible rollover fund with an investment strategy that may not suit you.

It’s worth thinking about consolidating your super with one fund. To find out more or if you want to consolidate your super into legalsuper just email Leo Maximos at lmaximos@legalsuper.com.au or call him on (03) 9607 9343 and ask for the relevant consolidation form.

Cosy super deals do some employees a disservice

Did you know that in certain situations your super fees can automatically increase when you change jobs?

This can happen where a super funds offers a special fee deal (often to large employers) to help win their default super fund nomination – the fund into which employees’ super is paid if they do not choose a fund themselves.

The catch for employees is that the lower fee deal lapses when they leave that employer for another job – the fee deal is contingent on their continuing to work with the employer.

In our experience some employees are not fully informed of this dependency when they join or leave their employer and so employees don’t know they are to be hit with higher fees when they change jobs.

This does not occur with legalsuper.  If you change jobs, legalsuper’s fees do not change and nor do your other member entitlements.

legalsuper has long held the view that super funds and employers should clearly disclose the existence and nature of these discounts, both when employees are considering joining and leaving a fund and have publicly advocated for more transparency when it comes to corporate deals between employers and super funds.

We have come across a number of super funds offering corporate deals to employers in the legal sector.

Gen Y is particularly prone to being caught out given they will change jobs more often over their careers. Young lawyers are also more exposed as they often have multiple jobs in the first ten years of their careers.

The practice also makes comparing super funds more complex and is another obstacle in the way of employees understanding and engaging with their super.

Discounted Health Insurance for legalsuper members

legalsuper has negotiated a highly-competitive health insurance offer for members with nib, one of Australia's fastest growing health funds.

The health insurance offer with nib gives legalsuper members two great benefits.

1. A discount - as a legalsuper member you will receive an exclusive 8% premium discount on health cover if you pay your premiums via direct debit.
2. No waiting period for extras - if you join the nib health plan through legalsuper, you can claim on extras like optical, general dental straight away rather than wait the usual 2 and 6 month waiting periods.

Click here to find the right health plan for you.
 
If you have any questions or to claim your discount, you can contact nib on 1800 13 14 63 and remember to tell them you are a legalsuper member.