The advent of choice of superannuation fund and the advertising campaign surrounding the new policy has driven public awareness of superannuation to record levels, according to research conducted by Australian National Opinion Polls (ANOP).
The research, commissioned by the Association of Superannuation Funds of Australia (ASFA) and presented at the association’s national conference in Melbourne, found the highest level of consciousness of superannuation ever recorded, with 50 per cent of respondents to the ANOP survey being able to discuss matters relating to superannuation totally unprompted, and 90 per cent able to discuss issues after some prompting.
But what the ANOP research also revealed was that ASFA’s principal researcher, Ross Clare, had been almost exactly right when he more than 12 months ago predicted that the level of churn generated by the new choice of fund regime would be around 7 per cent.
The managing director of ANOP, Rod Cameron, said the survey had revealed that only 7 per cent of respondents had changed superannuation funds since the new choice regime had been implemented on July 1, 2005, and that only a further 5 per cent had indicated they were still seriously considering changing funds.
Cameron said this represented a major victory for the superannuation industry with 55 per cent of survey respondents now saying they were not at all likely to change funds.
“In a clear display of increasing fund loyalty, the ‘rusted on’ component of fund members has increased dramatically from 37 per cent a year ago to 55 per cent now,” he said. “It appears that the most significant outcome of the choice campaign is a sharp increase in commitment to existing funds, rather than a desire to find greener grass elsewhere.”
Cameron said that one of the reasons that people were opting not to change was loyalty to existing funds — something that had been generated by the efforts of superannuation funds to ensure they retained members.
“We asked those committed to their fund to rate the importance of seven factors in the decision to stay with it,” he said. “Number one driver was clearly financial performance of the fund, followed by fees and charges, lower down the pecking order was the fund’s reputation, followed by financial advice, investment options, communications aspects and insurance coverage.”
Cameron said those who had opted to move cited their main reasons as being fees, returns and the desire to consolidate a number of funds.
“It is also instructive to see where they ended up,” he said. “About half went to industry funds and about a third to one or other of the retail funds.”
Cameron said that, importantly, there had been very little movement to self-managed funds.
Looking at those who indicated they were on the cusp of changing funds, the ANOP survey found that most were pursuing better returns and lower fees or had simply changed jobs.
“But top of the list is the often overlooked factor of wanting to consolidate,” Cameron said. “This likely to change group is over-represented by those who currently have more than one fund.”
“Consolidation is a real ‘win-win’ factor in the industry, with clear benefits for both fund and member,” he said.
Looking over the horizon, the ANOP research suggested that there was scope for the Government to do more to encourage Australians to save for their retirement, such as providing further incentives for people to salary sacrifice into superannuation and extending the co-contributions regime.
“Our research over the past four years has found an increasing community realisation that many have not saved enough for retirement,” Cameron said. “While national security and IR [industrial relations] clearly top the Government’s agenda at the moment, new policies and initiatives on super and retirement incomes should be an important part of any political party’s election package over the next decade.”
