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Superannuation compliance and post-retirement success for your staff

Superannuation compliance and post-retirement success for your staff

Jeremy Cooper is the chairman of retirement income at Challenger and one of Australia's foremost authorities on superannuation. With retirement income becoming a huge topic for business owners, he shares his insight into employer responsibilities, the current requirements and how to ensure your staff get the information they need.

Where do you see the biggest knowledge gaps around retirement?

People underestimating life expectancy is a big knowledge gap. National Seniors Australia says that near-retirees can underestimate their life expectancy by up to seven years from the average age of 88. Also, 88 is only the average life expectancy – half of today’s 65-year-olds will live beyond the average.

Another key knowledge gap is people understanding how much retirement income a lump sum can provide. While an account balance of $200,000 or even $500,000 might sound like a lot of money, it might not be enough for a long and comfortable retirement. Retirement is expensive and can last for over 30 years, and the risk is that you won’t save enough only to find out when it’s too late.

Speaking to a financial advisor or using a retirement-projection calculator can help identify how much income your lump sum would be likely to generate.

How can employers find out about their exact responsibilities?

The Australian Tax Office (ATO) is an excellent resource for employers who want to understand what their responsibilities are when it comes to super. The ATO website has a lot of the information about what an employer needs to know including: setting up super for an employee; working out how much super to pay; and what to do if obligations haven’t been met. The ATO even has a free small business clearing house that businesses with less than 20 employees can use to make all their super payments.

How problematic can it be for a business to fall behind on employee super payments?

Employers who fall behind paying their super obligations can face heavy penalties. These include financial penalties, director penalties and even the possibility of the business losing the tax deduction it would normally get for paying super contributions.

All of these can be a real headache for businesses, so it is important that all employers avoid the administrative tangles that can flow from not meeting their super obligations.

How can you ensure staff get the information they need?

Employees will get most of the information they need for accumulating their retirement savings when they join their super fund. Most super funds’ websites are equipped with retirement projections, contributions calculators and super insights, which can be a useful first step.

For further information, funds generally offer free call-centre-based information services. This can range from providing non-personal general advice to helping members with any information requests they might have.

Funds also send out statements detailing the member’s accrued benefits twice yearly and often hold annual seminars for members. When approaching retirement, members will need access to more information and help from their fund, so seeing a financial advisor is beneficial. Most funds have their own financial planner networks or can recommend a member to a preferred advisor network.

What else can be done to ensure post-retirement success for your staff?

Employers can help prepare their current employees for retirement success by talking about super in the workplace – making it part of the employment experience, rather than just a process.

They should also pay all contributions owed to them in full and on time. Encouraging employees to salary sacrifice, and making this process as simple as possible, is also helpful.

Employers can also consider offering employees contributions beyond the minimum requirement as part of remuneration-package negotiations.

What can businesses do to ensure they’re doing everything correctly?

Businesses should make superannuation recordkeeping a priority. Good recordkeeping will help to prevent an employer running afoul of their super responsibilities. Businesses should also use the ATO website as a resource. It provides information in a clear and easy-to-understand manner.

What’s the best piece of advice you received when starting in business?

Well, I can’t remember that far back, but if I were giving advice to someone starting today it would be along the lines of: you can never stop learning.

Staying on top of changes to superannuation policy can be challenging, but it’s important for your business and for the benefit of your staff. Read more about keeping ahead of your superannuation requirements.

Jeremy Cooper is the chairman of retirement income at Challenger. He was the deputy chair at the Australian Securities and Investments Commission (ASIC) and was the chair of the Super System Review. His recommendations led the Labor government’s sweeping superannuation reforms, which changed the way the system operates today.

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