Members oblivious to market upswing
Superannuation fund member disillusionment over fund returns is at an all-time high despite a recent upswing in investment market performance according toInTech, with the research firm calling on trustees to communicate details of the improved situation to restore confidence.
Recent forums held by InTech and attended by some of Australia’s largest super fund executives found that the preserved nature of superannuation left many members feeling powerless when faced with the disappointing returns of the past two years.
Also emerging from the forums was a tendency for investors to blame funds for poor returns from their chosen investment strategy, despite the fact that many members have access to investment choice, placing responsibility for investment outcomes firmly in their court.
However InTech executive director Brett Elvish says the longer-term implications of this disillusionment are of most concern.
“The current lack of confidence in super also means that it is unlikely that there will be government support for increased contributions and members are certainly less likely to top up their super via personal contributions in the current environment,” Elvish says.
To counteract the effects of this confidence crisis, InTech recommends communicating more “good news stories” - such as the recovery of the Australian and international markets over the last five months and the median growth fund returning 8.6 per cent over this period - and not just relying on annual member statements to get the message across.
“Increasing the frequency and quality of communication is essential if we wish to restore member confidence in superannuation saving. This education and confidence is vital if individuals are to save sufficient amounts for retirement and will also aid in increasing support for increased contributions at the political level,” Elvish says.
InTech’s latest figures show the recovery is taking hold, with one year median returns ranging from 1.6 per cent for high growth funds to 4.9 per cent for conservative growth options.
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