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Activity – based fees for admin
The increasing workload created by the Federal Government’s changes to the Australian superannuation environment has prompted administrators to look at abandoning the traditional ‘flat rate’ pricing model and moving to an activity-based arrangement.
The problems confronting administrators were outlined at the recent Conference of Major Superannuation Funds on the Gold Coast, and were confirmed to Super Review by the chief executive of Pillar Administration, Peter Cormack said his company was now actively discussing a move to activity-based pricing on the basis of the increased demands that had flowed from recent Government policy changes, including choice of fund and the new Simpler Super regime.
He said workloads confronting administration companies had seriously increased, and this was before taking account of the changes that would flow from the Government’s anti-money laundering and anti-terrorist initiatives.
Cormack said the bottom line driving the push towards a new activity-based pricing model was the reality that, in one instance, a 6 per cent increase in membership for one superannuation fund had led to a 30 per cent increase in the workload confronting the superannuation administration company handling member complaints and enquiries.
He said the issue had been raised with the boards of client superannuation funds, with the majority of trustees indicating they understood the issues and the arguments being put by the administrators.“What we are trying to do is develop a model that sees pricing move with the levels of activity being undertaken at any given time,” Cormack said. “That is something that will work to the benefit of both the administrator and the client superannuation fund.”
He said the traditional flat-rate model based on so many dollars in administrative charges being attributed to each member no longer worked, albeit that the situation tended to differ depending on the make-up of particular superannuation funds Cormack said at least a part of the reason for the higher activity levels confronting superannuation funds was that people were now far more aware of superannuation and the impact of changes in Government policy.“What you find is that people hear things about changes to superannuation and this prompts a spike in the activity levels of administrators,” he said.
AUTHOR
Mike Taylor
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