A majority of superannuation fund members (52.5%) are now engaged with their super fund, the highest proportion in three years, new research from CoreData shows.
The 2014 CoreData Member Engagement Report revealed Baby Boomers are now the most engaged generation, overtaking Pre-boomers for the first time in three years.
The research, which derives superannuation member engagement scores based on the proprietary CoreData Engagement Index©, with key dimensions of the index including engagement behaviour, engagement attitudes, satisfaction and intention.
More than three in five Baby Boomers (60.2%) are classified as Engaged or Highly Engaged, compared to only 52.1% of Pre-boomers. The proportion of engaged members has risen from 47.5% last year, a positive sign for the superannuation industry that people are paying more attention to their retirement savings.
Further, overall satisfaction among super members has increased year-on-year with close to two in three members (65.6%) satisfied with their main super fund, up from 62.1% in 2013 and 50.8% in 2012.
Encouragingly, compared to 2013, members also have higher intention to continue to use their fund (76.8% vs. 74.3%) and higher intention to recommend their fund (48.4% vs. 43.6%).
However, despite higher overall satisfaction and the increase in engaged members, close to half of super fund members remain disengaged with their fund to some extent (47.5%), a decline on 2013 (52.0%).
Communications need to be tailored
The quality of super fund communications has improved this year, with more than three in four (76.6%) respondents rating them as always or usually good quality (70.8% in 2013).
However, in order to improve their communications with members, funds need to look to tailor their messages to different segments and individual members, with a large majority of respondents saying they want communications to be summarised with access to detail if needed (77.9%) and tailored to their life stage and needs (69.0%).
Sizeable intra-fund advice opportunity with Gen Ys
Improving member engagement is increasingly important for super funds to retain and grow their membership in the battle against potential churn and leakage of high value members to the self-managed super fund (SMSF) sector, particularly given that highly disengaged members are the most likely to leave their fund and establish an SMSF (23.1%).
Advice and education will be critical for super funds in driving engagement, particularly among younger generations. While only one in three (33.5%) respondents has used their fund’s financial planning services, with Gen Ys the least likely to have taken up intra-fund advice (11.8%), more than one in three (36.4%) of those who have not used their fund’s advice services intend to use them in the future (if available), with Gen Ys the most likely to do so (49.3%).
“Given the sizeable latent demand for intra-fund advice, it’s critical that super funds focus on communicating their advice offer to members and using this as a tool to start the conversation with younger members about the value of superannuation savings,” said Kristen Turnbull, head of financial services at CoreData.
“Engagement is a double edged sword, since it could see members choose to consolidate their superannuation with a competitor or switch super fund. It’s likely that we will continue to see engagement levels rise in the super industry due to the huge demographic shift taking place with Australia’s ageing population, however it’s critical that funds don’t just focus on engaging older, higher value members.
“The savings opportunity for younger generations who have had the benefit of compulsory superannuation for their entire working life is enormous. Funds need to take a long term view and focus on the entire customer lifetime value.”
Public sector members most satisfied and most engaged
Public sector fund members are the most likely to be satisfied overall with their fund (7.3 out of 10), while industry and retail fund members are the least likely to be satisfied overall (both 6.9).
Satisfaction is highest with online service: access and options (68.8%), followed by website: usefulness and content (66.9%) and investment performance (63.2%).
Compared to 2013, satisfaction scores improved across all categories measured except ‘call centre’.
Satisfaction is lowest with fees and charges (48.9%), although this is on an upwards trend (45.5% in 2013 and 37.9% in 2012), and call centre (51.3% vs. 53.5%).
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