Company saving schemes

If you want to add major value to your employees' savings, check out your options for providing a company savings or super scheme.

Group buying power

Savings institutions and fund managers love dealing with company groups. It's cheaper for them to deal with investors as a group rather than individuals.

Many institutions will be prepared to pass on some of these savings to attract your group. They might do this through reduced transaction or administration fees, or in the case of simple deposit schemes, they might offer a higher rate of interest.

Master Trusts

Most company schemes offered by employers today are master trusts. In a master trust, all the administrative, legal, investment and insurance needs of the scheme are combined and managed by a single organisation.

Cost-wise, a master trust is usually more competitive than a stand-alone scheme unless the scheme covers a large number of members (3 - 500).

You can choose how much financial commitment you want to make:

1. No financial commitment
   
   • You arrange with a financial institution to give your staff access to a master trust savings scheme. Your employees benefit from cheaper fees, and a greater spread of investments and risk than they would be able to achieve if they invested privately.
   • Master trusts usually have insurance (life, disability and sometimes medical plans) as part of the deal. You can choose to subsidise these or not. Even if you don't subsidise them, your employees can save money by switching their personal insurance to your master trust deal.
2. You pay the fees
   
   • As well as access to the scheme, your contribution includes payment of all or some of the fees for your employees. For what may not necessarily be a large investment on your part, (say $100- $200 a year per member) it significantly increases the benefit to your staff.
3. You contribute to the scheme
   
   • This is the highest value end of what an employer can offer to staff - you contribute money alongside your employee's contributions to the scheme, as well as paying the administration costs of the scheme.

Before deciding which option is best for you and your business, you'll need good advice. Most financial institutions and financial planning professionals will be able to help you make your decision.

Company superannuation scheme

While master trusts are becoming more popular, many larger companies still run a stand-alone company superannuation scheme.

If you want to explore the company super scheme option, talk to an independent consulting actuary or a professional financial adviser. Check out our checklist for financial advice for tips on getting good advice.