Super regulator reveals our lack of confidence
The ASIC boss reviews our superannuation system and questions if it is delivering on its original promise.
NSA research sheds light on member engagement and more
A recent survey, conducted by National Seniors Australia (NSA) with support from industry organisation Super Members Council, found evidence of a lack of engagement among older people.
While many check their balance regularly and read fund publications, many do not engage with free or fee-based advisors attached to their superannuation fund.
Unsurprisingly, engagement rates are lower among those at risk of financial disadvantage, pointing to a clear opportunity for targeted improvement for funds.
It’s not all doom and gloom though, a majority of survey respondents found the various fund information sources (e.g., website, fact sheets, newsletters and advisors) as useful, however with varying degrees of confidence.
You can read more about seniors’ views on superannuation, including their desire for performance tests for retirement phase products, by downloading the full report.
“There are leaders and laggards.” ASIC Commissioner Simone Constant was delivering hardly a glowing assessment of funds across the super system, when she recently addressed the Conexus Retirement Leaders’ Summit in Canberra.
“ … super trustees have done a remarkable job at building the wealth of Australians,” she said. “But when it comes to helping Australians enjoy that wealth, there is a lot more work to do.”
Her less than overwhelming assessment is based on a progress report of super funds through the prism of the three-year-old Retirement Income Covenant – a legislative obligation for Australian superannuation trustee companies to develop and implement a retirement income strategy to help their members in or approaching retirement better achieve improved outcomes. (Read more here.)
ASIC’s assessment is that while some trustees are hitting the straights, and others are still on “the starting blocks”.
The reasons?
The data reveals why this gap is emerging. ASIC’s super pulse check shows one in five trustees cannot track the success of assistance to members in balancing the objectives of the Retirement Income Covenant.
The commission warns it can’t wait more years to get it right when each year, more than 100,000 Australians retire.
“You can’t wait to serve them better because they need the support right now. Compulsory superannuation must also get more competitive,” Ms Constant warned.
Australians lack confidence for retirement
Fewer than one in five Australians (18%) has a clear financial plan before retiring. Only one in four (26%) had high financial literacy. And only two in five (41%) felt confident managing their retirement finances.
Fewer than one in three (31%) pre-retirees feel fully or reasonably prepared for retirement. That’s nearly identical to findings in 2024 (31%) and slightly down from 2023 (33%).
“This shows us the needle has hardly moved despite the covenant, at least in this regard,” Ms Constant said.
ASIC says there’s a gulf emerging in member services. Trustees are highly competitive on fees. They’re relatively competitive on returns. But there’s a sizeable satisfaction gap on member services that’s ultimately impacting member confidence.
Ms Constant was scathing in a muted way at how that 20% of super trustees that are laggards could so underperform, given the Federal Government’s recent discussion papers on best practice principles for superannuation retirement income solutions. and the retirement reporting framework. These are designed to drive better outcomes and transparency
Good for customers, good for business
ASIC’s monitoring of trustees’ progress implementing the covenant has revealed that super funds (trustees) that invest in communicating with their customers have better member satisfaction – and better member retention too.
“So, members stay invested with trustees who invest in them,” Ms Constance concluded.
Trustees use the term “members” to describe those who invest in them. However, ASIC reminded them that those investors see themselves a customers, and that’s the level of service they expect.
Ms Constant then lasered in on the fund representatives in the audience:
“So, let me ask you: do you know where your customers are at in their retirement journey? Do you know what tools they need? What prompts are required along the way to ensure they are making the most of their wealth?
“Do you look across your industry and other industries to benchmark what good customer-centric service can look like? If you don’t, you still have work to do.”
She then offered examples of good practice:
“This year, we’re seeing that trustees who are further along in their journey of knowing their members are using those insights to drive better member outcomes. We talk of cohorts and we see cohorts in the new principles. One trustee identified a cohort of their members that spoke a particular dialect from Papua New Guinea and they created superannuation guides in this language to support that cohort.”
“We’re also seeing this year that trustees are getting creative to better understand their member’s behaviour. For example, one trustee partnered with a bank to learn about their members’ spending patterns in retirement – remember what I said before about looking outside and being customer-centric?”
“Finally, we are seeing some trustees taking a data-driven approach to determining the most effective communication channels for members. They’re mindful of member communication preferences – online is easy, but it may not always be the most effective. The trustees doing this better are tracking cost per click on their retirement communications, which not only helps with meeting their Best Financial Interest Dutybut helps on further research and further cases to understand how to improve member communications and campaigns.”
Ms Constant said getting retirement and member services right isn’t just good for members, it’s good for business too.
“Three years into the Retirement Income Covenant, we are already seeing a big divide in how trustees are serving their customers,” she said.
“Whilst there is no pattern to this divide in terms of size or shape of fund, the one thing that is clear is the ones who are doing it better are benefiting.”
Related reading: ASIC
