Workers at large firms better off with company's super fund: Heron

Workers at larger companies who stick with their workplace super fund until retirement could be up to a third better off than if they switched to a retail fund, according to research by independent super consultants, The Heron Partnership.

Workers at larger firms would have 34% more superannuation after 30 years than a retail fund member because of greater buying power of their employers, Heron said, while similar workers at a small to medium-sized company could have up to 25% more. Even workers with 20 years to retirement could expect a 23% bigger payout if they worked for a large company, while smaller companies would have an 18% advantage.

Heron managing director, Christopher Butler, said corporate super had little to fear from legislation giving workers the right to choose their own fund, but new regulatory changes will boost out sourcing as companies re-think the cost of operating their own fund.

"The move by companies to outsource is driven by complexity, regulatory provisions, cost and the desire to improve services provided to their employees," Butler said.

Within 5 years, only some 200 companies would operate their own super funds, compared with the 1,500 today, Butler said. Heron assumed retail fund members would pay fees of 2.1% to 2.5% compared with 0.75% for members of large company funds and 1.07% for members of smaller company funds.