PLANSPONSOR - May - June 2023 - 2

'Super' Educational
INSIGHTS
I
recently spent a week at the ISS offices in Sydney meeting
team members of our four Australia media brands:
Financial Standard, FS Sustainability, Industry Moves and
Money. It was a great time spent, getting acquainted with new
colleagues. I loved learning more about their retirement system,
something those four publications cover in some depth-especially
our consumer-facing publication, Money.
For years, I've been aware of the Australian universal workplace
retirement system, called the Superannuation Guarantee after a law passed in 1992,
known simply as " Super " to my colleagues Down Under. In the U.S., it often gets cited
as an example when experts discuss our Social Security system and ways to make it
more individualized, as compared with pay-as-you-go. In practicality, it shares many similarities
with Social Security-e.g., near-universal coverage and mandated contributions
from both employers and employees-and also with our 401(k), 403(b) and other defined
contribution plan systems, as the investment risk is borne by the individual worker.
For all that the Australian system has been heralded as superior, I was struck,
when talking to a colleague, at how much is considered " enough " or the " right " contribution
level. This has increased incrementally over the years, from 9% in 2002 up to
12% taking effect in 2025-somewhat similar to the goal of total contributions of 10%
to 15% we see often referenced by experts here in the U.S.
With all the knowledge of behavioral economics and inertia that has so often led to
policy discussions here, I questioned how Australians were expected to select a provider
and investments for the mandatory retirement contributions. After all, we know how
important and valuable automatic enrollment and qualified default investment alternatives
have been in helping to get U.S. participants on the right track.
In Australia, an employee has the right to select a Super provider; this was apparent
from all the ads for financial firms I couldn't escape when turning on the TV in my
hotel room. But if the worker doesn't choose one, the employer has a default provider.
Similarly, while workers may direct their own investments, the provider does have
default options for any who feel ill-equipped to make those decisions.
Perhaps most interesting to me was to dig into some of the more recent initiatives
to aid people who had accumulated multiple Super accounts, helping them consolidate
those to avoid having fees eat up their savings or, alternatively, losing track of the
accounts. For readers who have dealt with missing participants or taken action to help
mitigate leakage from the plan, I imagine this sounds familiar.
We've often written in these pages-and I've opined as well-about how to help
participants and employees see the value of the matching dollars. One interesting
framing element I discovered was that, when looking for a job in Australia, job-seekers
have to ask whether the compensation is being advertised " with Super " or " ex-Super. "
That means if someone is offered $100,000 AUD [Australian dollars], will she expect to
have the mandatory contribution removed from that or added on top of that? We don't
always think about match or contribution rates in the same way here, because vesting
can mean some people don't get the match dollars to be " theirs " for a long time. But it
reinforces to me the value of thinking about benefits as part of total compensation and
communicating that view to participants whenever possible.
As we here in the U.S. continue to see initiatives from the government and public
policy groups designed to improve our retirement savings system, it's instructive to see
the priorities and implementation used elsewhere. -Alison Cooke Mintzer, Publisher
2 PLANSPONSOR.COM May - June 2023
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