Every week, dozens of super-related stories lob on our desks here at Super- Savvy. Two that have turned up this week are especially interesting.
Within days of each other, two organisations have released the results of surveys into the sentiment of super fund members. The conclusions of each reveal the impact of editorial bias in interpreting raw data.
First to land was Newspoll’s Community Attitudes to Superannuation survey. After collecting the opinions of more than a thousand superannuation fund members, the poll showed that 69 per cent of those surveyed were basically satisfied with their superannuation funds, while 17 per cent were dissatisfied.
As often happens in member surveys, industry fund members were happier than those in retail funds. 72 per cent of industry fund members and 71 per cent of public sector fund members expressed satisfaction, compared to 60 per cent of retail fund members.
27 per cent of retail fund members said they were dissatisfied. The most popular reasons given were high fees and poor investment performance. No surprises here. Most funds performed poorly and when you’re losing money, you tend to notice the higher fees charged by retail funds.
2008-2009 was a horrible year for most members. So you could be surprised that more than two-thirds of those surveyed remained so happy.
Why would members remain happy when they’ve seen a large chunk of their super balance sliced off in 18 months? Maybe they accept that the losses were beyond the control of the super funds. There was a global financial crisis, after all -
and that can hardly be blamed on the super industry. Perhaps they blame themselves for their losses. “I should have chosen an option with less risk.” “I shouldn’t have accepted the default option.”
The other explanation is that members are more savvy (pardon the pun) than they’re sometimes imagined to be. Perhaps they really do understand that super is a long term investment and it’s only long term performance that matters. Maybe they accept that super historically suffers negative years every six or seven years.
OK, let’s look at the second survey we’ve seen this week. The Mercer Superannuation Sentiment Index tells a different story. According to Mercer, the number of Australians polled in July 2009 who consider superannuation either a ‘poor’ or ‘fair’ way to save for retirement more than doubled from 17 to 35 per cent - in just 12 months.
Those rating super as a ‘good’, ‘very good’ or ‘excellent’ way to save for retirement fell from 80 per cent to 62 per cent.
To quote the Mercer report, “With share markets slowly recovering from the lows of the last 12 months, it is possible a rebound in sentiment towards superannuation is imminent. However, this will heavily depend on the role of government, industry and superannuation funds in rebuilding trust.”
Here’s something else revealed by the Mercer Index - only 44 per cent of people rate their fund’s trustworthiness as ‘very good’ or ‘excellent’. The younger the respondent, the lower the rating.
So what’s more important here? The 69% who are mostly happy with their funds? The 35% who reckon super’s a fair-to-poor way to save for retirement? The 44% who trust their fund? Or the rest who aren’t so trusting?
IF WE RAN A SUPER FUND, HERE’S WHAT WE’D DO
If we ran a super fund, we’d be worried. Whether we ran a public sector fund, an industry fund or a retail fund, the surveys tell us that a lot of Australians lack basic faith in super and many members aren’t happy with their funds. It would be arrogant of us to presume that OUR fund members were happier than average.
We would want to look at what we can do to improve these figures. And quickly.
How? First, we’d get our own house in order. We’d start a dialogue with members.
Find out what they want, how they think, how we can help them. We’d talk honestly, without any gloss. We’d explain more. For example, instead of just sending out annual statements showing the year’s results, we’d explain why a member’s balance has grown or shrunk. (For more on why you lost money last year, see our news story.)
We’d be doing everything we can to add value. We’d work hard to help our members make important decisions about their super, providing them with calculators, tools and advice. We wouldn’t insult wary members by saying we’re trustworthy or reliable or well managed. We’d leave that to others to determine. We’d seek independent analysis (and, hopefully, endorsement) of our investment strategies, our products and our fees.
We’d do this because if only 44% of our members really trust us, we’re in real danger of losing some of them to other funds. Worse still, they might set up their own SMSF. Because we have studied such things, we’d know that it’s WAY more cost-effective to keep current members happy than try to attract new members. If we do all this, we’ll have happier members and happy members are the best ambassadors we could have.
Having sorted out our fund, we’d move on to addressing the wavering faith in superannuation.
We’d do two things here. First, we’d make sure that the organisations that represent our industry put in place a strategy to restore faith in super.
Then we’d lobby the government. Hard. We’d use as our argument that the government needs to do its bit to restore confidence in super, because one sure consequence of Australians losing confidence in super is that more people end up on a pension. And that possibility really scares the government.
So, how do you feel about your fund? Write to us. Tell us what you think. We’ll address your concerns in future articles and we’ll put your questions to the funds.
Email:
Disclaimer: SuperRatings Pty Limited holds Australian Financial Services Licence No. 311880. This release has been prepared for the purpose of providing general advice only and has not considered the recipients objectives, financial situation or needs. The recipient should consider obtaining independent advice before making any decision about a financial product referred to in this report and should obtain and consider a copy of the relevant Product Disclosure Statement from the product issuer.