Several commonly held misconceptions about superannuation member engagement have been debunked by data from Russell Investments.
Presenting at Russell’s Australian Investment Summit last week, Russell’s director of member services, Justine de Mestre, said that Cooper Review proposals overlooked the range of ways that members can interact with their fund, which was not just limited to investment choice.
Among the commonly held misconceptions that de Mestre disputed with the aid of data from Russell’s SuperSolution membership was the idea that there was a flat divide between members who were and were not engaged with their fund.
Rather, there were a range of activities other than investment choice, including voluntary contributions, opt-ins to receive communication, phone calls and website visits, and consolidation of super. Although just 1700 of SuperSolution’s 56,000 members had actively made an investment choice, more than a third had engaged with the fund in some way, de Mestre said.
“Categorising members into segments based purely on whether they make an active investment choice as Cooper has done overlooks a whole range of member behaviours,” she said.
“Just because members aren’t making an investment choice doesn’t mean they’re not engaged. If you’re happy with your fund it’s unlikely you’ll make regular changes. But this doesn’t mean you’re not engaged with your fund.”
It was also untrue that pre-retirement triggered member engagement. The percentage of members who had made an investment choice stayed steady at around 22 per cent from age 30 up until retirement, before rising to 30 per cent after retirement when member needs changed substantially.
Younger members were actually less frequent visitors of the website, with the bulk of website hits coming from those in the 55 to 65 age bracket, showing that Generation X and Y were not the major source of online engagement.
Bigger balances also did not necessarily mean greater engagement, with investment activity increasing for members with an account balance of up to $150,000, and then remaining steady before dropping off sharply after $500,000.
She also questioned what funds would be doing to help members make the correct investment choice in a MySuper scenario.
“People are irrational, just because someone is engaged and making changes to their super doesn’t mean they are making the right choice,” de Mestre said.
“Funds have a responsibility to engage with members and help them understand how these decisions will impact them. This means arming members with the right information at the right time, regardless of whether they’re classified as engaged or disengaged,” she said.
