Member engagement needs to be back at the top of the agenda

16 April 2021
| By Mike |
expand image

It is now more than a decade since the so-called Cooper Review delivered its final report and gave rise to a range of key changes still filtering through the Australian superannuation system, not least MySuper, SuperStream, and the push for greater scale amongst Australian Prudential Regulation Authority (APRA) regulated funds.

And in recommending the establishment of MySuper, the review panel led by now Challenger executive, Jeremy Cooper, referenced a “simple, well-designed product suitable for the majority of members”.

The panel said the MySuper concept “is aimed at lowering overall costs while maintaining a competitive market-based, private sector infrastructure for super. The concept draws on and enhances an existing and well-known product (the default investment option). MySuper takes this product, simplifies it, adds scale, transparency and comparability, all aimed at achieving better member outcomes”.

A decade down the track, what can be said about MySuper is that, on the available information, it has resulted in generally lower fees but it cannot be said to have generated greater member engagement.

In fact, those with long enough memories will recall that before the Cooper Review came along and suggested MySuper, a significant part of the work carried out by organisations such as the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST) was the encouragement of fund members to actually engage with their super; to understand how much they had and what it delivered.

Today, as the Morrison Coalition Government pursues its Your Future, Your Super legislation on the back of its earlier Protecting Your Super Package (PYSP) and Putting Members’ Interests First (PMIF) legislation, there is good reason to suggest that superannuation funds and their representative bodies should once again be vigorously pursuing the encouragement of member education and engagement.

Quite simply, there is already abundant evidence that the combined effects of the PYSP and PMIF legislative arrangements have driven down insurance coverage within superannuation and there are justifiably mounting concerns about how the passage of the Your Future, Your Super legislation may magnify some of the effects.

Indeed, there are suggestions that there are those in the Government who are committed to pursuing an agenda which would see insurance inside superannuation as entirely voluntary across all age cohorts, something which would have significant implications for the nation’s already large insurance gap but for the profitability of the major life insurers.

Forgotten in much of the discussion around insurance inside superannuation is the fact that, for many Australians, it is the only significant life insurance cover that they hold and that they would be most unlikely to pursue alternative cover either directly or through a life/risk adviser. This fact alone, should make elected representatives and their non-elected advisers take pause.

Then, too, there is the reality that for many Australians working in dangerous occupations, obtaining insurance cover outside of superannuation would be simply too difficult and too expensive to afford.

These are just a few of the reasons why superannuation funds and superannuation industry organisations need to be encouraging members to understand what their funds are delivering and what it is really worth to them. This would at least help members to make an informed judgement about whether what the Government is legislating is in their best interests or its own – something which was entirely questionable with respect to the COVID-19 hardship superannuation early release regime.

As with everything, in superannuation knowledge is power and members need to be educated and informed about what they’ve really got and what it is worth.

Read more about:


Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

2 months 1 week ago
Kevin Gorman

Super director remuneration ...

2 months 2 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

2 months 2 weeks ago

A global investment executive has told Super Review why, much like the common adage, Australia’s super sector runs the risk of being a jack of all trades but master of no...

3 days 21 hours hence

New research into global pension markets has found Australian superannuation funds beat out their peers like the US and UK in equity allocations in 2023....

1 hour ago

The peak body for the superannuation industry says that intra-fund advice should be widened to cover the transition to retirement....

1 hour 49 minutes ago