What if your super fund's biggest cost isn't on any report you've seen?

When looking at costs, APRA requires that super funds pay a lot of attention. All trustees report each year what it spent on member services, on compliance, or on administration. One thing that can't be found easily is what poor-quality onboarding and incomplete member data costs - because that was never designed, by anyone, to show up as a single number in a single place.

Are the funds hiding things from members, or from the regulator? No, it's simply that prior to the Payday Super reforms, these costs were easily misunderstood, or disguised by a lack of data. This is because the errors created in the superannuation system upstream of the fund is distributed across every part of the organisation, and captured or reported under a different label.

Without member matching a duplicate account shows up as an administration expense. Without data validation a member who was never properly verified, and who a decade later cannot be matched cleanly to their insurance policy, shows up as a claims-handling delay. A member registration request from a participating employer that goes unanswered by an administrator shows up - if it shows up at all - as a compliance metric buried in a quarterly board pack. None of it is labelled, anywhere, as "the cost of sub-par onboarding and data validation". It shouldn't be costing funds anything, but it is.

That makes the problem easy to miss, and easier still to chronically underinvest in fixing.

A fund spends heavily and visibly on brand marketing, acquisition marketing and retention campaigns because that spending shows up clearly in a single budget line, with a single owner and a single set of KPIs. Meanwhile, the moment that actually determines a large share of the fund's downstream administrative burden for the next 40 years - the employee's onboarding moment with their employer - receives comparatively little executive scrutiny, simply because its true cost never lands in front of the people making that year's budget decisions. You cannot manage what accounting doesn't let you see.

This may not a new problem, but it is an urgent one. Payday Super no longer enables the old quarterly clearing-house model, where a data-quality issue at onboarding had months to surface before it became consequential. Since Payday Super came into effect - requiring employers to remit contributions within seven business days of every pay cycle - that margin has largely disappeared, and a cost that was already invisible has been given far less time to hide.

It is worth being blunt about how large that cost can be.

Where duplicate and exception cases are handled by an outsourced administrator, industry pricing for manually resolving a single flagged case can run from roughly $20 to well over $100 for cases that require investigation - multiplied across tens of thousands of cases a year at a large fund - to the tune of millions of dollars per year, per fund - and the scale is apparent when these cases occur as a proportion of the two million new hires across Australia each year. This fee is charged to an administrator to the trustee and is borne by the member as "admin fees" and is borne as internal costs where the fund services the trustee via its own administrator. This is a key driver of frustration at APRA, who are yet to see fees materially reduce for members despite the theoretical benefits of merging smaller funds.

Administration fees are not the only cost. In one case that we helped solve at SuperAPI, a fund had unknowingly been losing around 20,000 new members a quarter - not to a competitor, but to a reconciliation process that could not keep up with the exceptions it was generating. Once the underlying business rule that had been incorrectly set by the trustee was solved at the administrator, those members stopped falling through the gap. None of it ever showed up as "the cost of onboarding". It showed up as an administration invoice for the reconciliation process, and as reduced FUM and lower membership growth in the quarter, dismissed as BAU but actually caused by inefficient onboarding at participating employers.

The pattern repeats across a familiar set of categories, once you go looking: duplicate accounts that would never have existed with proper matching at the point of entry, and that now quietly attract two sets of fees instead of one - a join fee and a de-duplication fee; unresolved member registration requests that accumulate rather than resolve; members insured under a fund's policies who never completed the correct binding nominations to help claim it; and a steady stream of manual exception-handling that shows up as a line item with no obvious link back to the onboarding decision that generated it.

None of this is a criticism of any individual fund's administration or member services teams, who work tirelessly to triage and resolve the exceptions in front of them as well as the process handed to them allows. It is a structural point: if a cost is never measured as a single figure, no one is ever accountable for reducing it, and it keeps compounding in the background, largely invisible to the people with the authority to fix it.

There is a useful analogy in other capital-intensive industries. Manufacturing businesses spent decades treating unplanned equipment downtime as an unavoidable cost of doing business, scattered across maintenance budgets, lost-production estimates and overtime pay, until someone finally added it all up into a single "cost of downtime" figure and found it dwarfed the capital cost of the fix. Superannuation has an equivalent number sitting inside it right now - a cost of poor onboarding - and almost no fund has done the exercise of adding it up.

The first step is not a new technology purchase, and it does not require picking a vendor before anyone knows the size of the problem. It is measurement: pulling together figures that already exist in separate parts of the business and analysing them, for the first time, against an employee and member journey rather than reporting them as disparate, non-related costs.

That exercise looks different for every fund, but it is not complicated to design, and it takes only a willingness to put the number in front of a board, attached to a name, on an agenda.

Most funds have not taken that first step. Boards will approve marketing budgets they can measure, because those are the budgets put in front of them. Until onboarding and member data validation gets the same treatment - measured, attributed, and put in front of the people who can act on it - the honest answer to what employee and member onboarding data quality is really costing a fund, and its members, is simply this: nobody knows yet, because nobody in the organisation has been asked to account for it.