Regulator slams super funds over customer service
Superannuation is all about retirement – so why are funds so bad at retirement planning? How is your fund performing?
Earlier this year, super funds were found to be failing members with death benefit claims, with media reports of members struggling with poor customer service.
That prompted the regulator, ASIC to accuse the funds of causing “genuine suffering” to grieving families.
The corporate regulator has now raised the alarm about communications and customer service in preparing members for retirement.
It found that members were underprepared to for making the necessary retirement planning decisions because of fund lack of urgency by the funds in improving retirement communications.
ASIC’s review, Report 818: From superficial to super engaged:
More than 1.5 million members are in the retirement phase, collectively holding $575 billion in superannuation assets, and more than 2.5 million Australians will enter retirement over the coming decade.
However, ASIC’s Moneysmart research suggests only one-third of Australians on the cusp of retirement are confident that they will be financially comfortable once they leave the workforce.
ASIC Commissioner, Simone Constant, said it is important that superannuation trustees (funds) focus their attention on providing meaningful and timely retirement communications to their members that can meet their diverse needs.
“Moreover, members entering retirement typically hold larger balances, require more tailored solutions and expect high-touch support,” she said.
“Trustees that can meet these needs stand to unlock powerful commercial outcomes: stronger member retention, deeper engagement, and scalable growth.”
Retirement phase failure
A core membership group – retirees – were found to be neglected under the “one size fits all” communications approach of many funds.
“Trustees have developed significantly fewer communications targeted at retired members,” Ms Constant said.
“Most of these targeted communications were more relevant to members in the lead up to, or in early stages of retirement, which given the size of the retirement wave already breaking, is a real missed opportunity.”
Other groups being poorly serviced were First Nations members, vulnerable members, and culturally and linguistically diverse members.
None of the trustees ASIC reviewed had developed specific retirement communications for vulnerable members.
Ms Constant said effective data and research capabilities were critical in producing meaningful insights for driving strong member engagement.
"Some trustees demonstrated how individual retirement communications were tailored to some of these groups and others demonstrated innovative approaches to member engagement, like offering webinars, in-person seminars, TV programs, and radio and social media content,” she said.
“However, we saw little evidence of wider processes in place to identify vulnerable groups and adequately support them with tailored retirement communications.”
One third of trustees did not have a formal process for member feedback, prompting the regulator to observe that funds cannot understand member needs if they do not have processes in place.
Those funds delivering better communications and customer service had robust governance, strong data and research capabilities, and effective benchmarking, she said.
ASIC is calling on funds to do the following:
Focus on informing members about retirement, rather than prioritising product promotion and member retention
Develop retirement communications that are better tailored to member needs
Better tailor retirement communications to the diverse needs and preferences of member groups approaching, and in, retirement
Ensure retirement communications are accessible to culturally and linguistically diverse members and members with a disability
Adequately resource governance structures to execute the retirement income strategy and communications strategy, with appropriate oversight by executive and management-level staff
Strengthen oversight of external service providers that develop and deliver retirement communications to ensure the communications meet quality, compliance, and strategic expectations.
ASIC said it will continue to monitor industry progress.
