Many super funds do much more than just help you save for retirement. Some also offer insurance, home loans, financial planning and shopping deals.
By Andrew Keevers

KEY POINTS
You don't have to wait until you retire before you start taking advantage of your super fund. Super funds offer on average 15 different extra benefits and services. Smart super funds are always expanding their services and features to make themselves more attractive. If your fund isn't one of these forward thinkers, it may be time to shop around.

The ultimate objective of a super fund is making money for its members. It is the reason they exist. But can super funds do more for their members without impeding this fundamental mission? In other words, do members really have to wait until they retire before they can start claiming at least something back from their super fund?
The answer appears to be yes. Super funds now offer so many extras that even the most basic funds, through careful strategic alliances, can be almost one-stop-financial-shops. The pressure this is putting on the big brand industry funds and master trusts is leading almost to an arms race.

Latest research

In 2006 Rainmaker researched 231 super funds and master trusts and found that super funds now offer a median 16 extra benefits, up marginally from 15 last year, but almost double the result from the 2003 survey.

What is unchanged from previous surveys is that while there is no noticeable difference between industry funds and master trusts, as the very best in each segment are head and shoulders above the medians in their group.
Government funds however had the lowest median number of extra benefits, perhaps reflecting their captive heritage and that its only been quite recently that they have been turning more attention to member retention and responding to their competition.

There was also no difference for public offer versus non public funds, which means all fund types are responding to consumer pressures regardless of whether they play in the open markets or not.

Indeed, with super choice, non-public offer super funds have arguably the most to lose by not competing hard because if they lose members through job mobility they are very restricted in how they can compensate and pick up new members.

This is because being restricted to relying upon being an employer's default fund in-turn means they are relying upon only minimal changes to their current captive award and industrial agreements.

With the new industrial relations Workchoices framework now in place and set to expand, this strategy makes some non-public offer funds very susceptible to membership leakage and perhaps this is why there is such a strong trend among public sector and industry funds to become public offer.

Returning to the research however, the best industry funds and master trusts were found to offer up to 26 extra benefits and services, while the best government funds only offered up to 20.

The most common extra super fund benefits are having a website with 99 per cent penetration, having a call centre (97 per cent), offering investment choice (94 per cent), offering online account access (90 per cent), having death/TPD insurance (89 per cent), having death only insurance (84 per cent), offering spouse accounts (82 per cent), having allocated pensions (72 per cent), having EFT transactions for employers (71 per cent) and offering members financial planning services (70 per cent).

While many readers may argue that not all these features should be considered “extras”, the strategic issue is that only a few years ago they were very special features indeed. For example, the dramatic expansion in the proportion of super funds supporting EFT transactions, up from 10 per cent in 2003 to 71 per cent today, illustrates how the service range is becoming so much more sophisticated.

Extra Benefits per Segment

Source: Rainmaker Information

Funds, mini-institutions and products

While there are only slight differences between the extra services offered by the different segments, industry funds are much more likely to offer products like home loans, personal loans and credit cards through the fund.

This, at first glance, suggests a powerful advantage for industry funds. But does it really? By this we mean it may be because industry funds are largely independent “silos” where the fund is the predominant legal entity around which everything is based.

On the other hand, master trusts are merely superannuation vehicles designed by financial institutions to integrate with other products already offered by the institution.
In other words, a not for profit fund is really like a mini financial institution while a retail super fund such as a master trust, is really just one branch of what is available from the wealth management group which the consumer accesses through their financial adviser. Comparing super funds to master trusts too simplistically may therefore miss the point of how master trusts really operate in the market.

Fastest growing extra benefits So what are the types of extra benefits that are growing the fastest? The graph illustrates that while change is being seen in just about every extra benefit category, some are growing slowly and some are surging. Reflecting how progressive super funds are now looking for more fringe benefits to add to their service range, it is the 'second tier' of extra benefits where the real changes are being seen. For example, going public (not needing an employer to get you into the fund), the availability of spouse accounts, letting members invest in shares directly, offering non-super investments, making EFT transactions available to employers, offering allocated pensions, offering more sophisticated investment choice, providing better and more regular investment updates and reports, and providing access to financial planning are the hot new services. In this context, the spectacular failure of extras like children's super accounts or the very low level of shopping discounts being available through super funds should not go unnoticed. However, core business related extra benefits such direct share access, EFT transactions, offering financial planning, and expanding investment menus are proving to be much more of a mainstay. The only threat though, is that funds should be wary of adding features for their own sake, or adding high cost features unlikely to attract member interest. Reflecting these developments, it may not be too surprising that the leading funds almost match each other in the number of extra benefits they offer, meaning that the best funds offer so many extra benefits that even calling them “super funds” is really no longer right. Conversely, funds not offering lots of extra benefits are really not serious about serving you and you should look elsewhere for a good super fund.

Most Common Extra Benefits 2003, 2005 and 2006     Source: Rainmaker Information

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