Confidence in the superannuation system is at its lowest level since member attitudes were first surveyed by CoreData in 2001, according to CoreData principal Andrew Inwood.
Speaking at the Association of Superannuation Funds of Australia conference, Inwood said that unlike dissatisfaction with other issues (such as politics) the lack of confidence in superannuation was undirected because it was a ‘future’ concept.
“This is both a good thing, because it makes the perceptions pretty flat; and a bad thing, because it makes it hard to engage people,” Inwood said.
Despite a broad perception among superannuation practitioners that growth in the super industry is “dead” due to leakage to self-managed super funds, Inwood said the opportunities were there if people could be engaged with properly and offered the right products and services.
“You’ve got to have a case for saying: ‘You can’t manage your shares better and cheaper than I can’,” he said.
The biggest factor behind member satisfaction is returns, and people only get very positive about their superannuation if their returns hit double digits, Inwood said.
“Satisfaction reaches 80 per cent when returns are 10 per cent … If your fund’s return is at 9.8 per cent and you can sell something to get it to 10, I suggest you sell it,” he said.
Another notable finding by CoreData is that 80 per cent of people have maintained their investment strategy, which Inwood points out is a very high number considering the volatility of the market.
“So inertia is both your biggest friend and you biggest enemy, because people don’t want to do much,” he said.
With the changing demographics and an ageing population, net growth into superannuation funds is going to come from people switching funds – not new members, Inwood said.
