Industry superannuation funds in Australia are always ahead of the game in terms of member satisfaction, but maybe not for long. Members of retail super funds, by contrast, have been traditionally less satisfied, especially with financial performance, however in a recent poll, retail super funds were rated at 58.9 per cent. This puts retail funds only slightly below industry super funds, which now sit at 59.6 per cent in the six months to August 2015. This is the smallest gap in the last five years.
Roy Morgan’s Single Source survey asked a staggering 15,525 Australians who hold superannuation their thoughts on their superannuation fund.
The results have varied since 2010, but industry funds have always beaten retail funds for satisfaction. Times are changing, and retail funds are fast catching up.
The data shows satisfaction from way back in August 2010 was lower for both retail and industry funds, sitting at 47.5 per cent and 53.6 per cent respectively. There was a huge dip in 2012, where satisfaction of both types of super funds bottomed out with the stock market, with retail fund satisfaction hitting the low 40s, and industry funds dipping below the 50 per cent mark late in the year. The gap is closing.
Retail fund satisfaction, the report states, seems to be more sensitive to stock market fluctuations than retail funds.
The most super dollars are held by a low number of members
The funds held by members are skewed, with 63.5 per cent of members with super balances less than $100,000 holding only 18.6 per cent of the total dollars. Those with balances over $700,000 are just 2.5 per cent of all super members, but they hold 17.5 per cent of the money.
Those with $250,000 or more account for just over half the funds, but are 14.3 per cent of members.
Industry funds are not the favourite of the high-value market ($700,000+). Retail funds score 81.1 per cent satisfaction for these people, with 77.6 per cent for high-value industry fund members. Self-managed super members, however, have the highest satisfaction – 85.8 per cent. This area is where most of the competition for super funds comes from, since those with high balances tend to want more control.
How people feel about financial performance of their fund
While those with less than $5,000 and those with over $100,000 (but less than $250,000) had the largest margin in satisfaction levels, other groups had less percentage points between retail and industry funds. The most satisfied with both types of funds were those in the $700,000+ slots.
The higher your balance, the more satisfied you tend to be no matter which type of fund – retail or industry – funds sit with.
Norman Morris, Roy Morgan Research’s industry communications director, said: ‘With intense competition between retail super funds and industry funds, it is important to understand what fund members think regarding the financial performance of the two groups. It is ultimately the members who will decide where their funds are best directed.
‘Of particular significance is the fact that industry funds have now only got a narrow lead in satisfaction over their retail rivals to the point where their strong market positioning on this has been largely dissipated. It is important to note that both groups face potential losses to self-managed funds from their higher value members if satisfaction levels decline. Currently satisfaction with self-managed funds in the $250,000 and over group is 77.7%, ahead of industry funds (74.0%) and retail funds (72.9%).
‘The relative satisfaction across competitors in the over $250,000 group needs to be closely monitored because they hold over half (52.7%) of all superannuation funds and yet only account for 14.3% of members.’