Are Australians being short-changed by their super funds?
A financial adviser claims Australians may be missing out on millions through a lack of support and advice from superannuation funds.
An estimated four million baby boomers and gen Xers are expected to retire in the next 10-20 years, and move into the pension stage of their superannuation. Now more than ever, people need advice about how to maximise their contributions. But are they getting it?
Paul Feeney, founder of the financial advice app Otivo, says no.
“It has never been a more important time for Australians to learn how to manage the accumulation and transition to retirement, and be able to sustainably provide income from their own super funds,” Mr Feeney told Super Review.
Otivo’s research has found that, on average, Australians who receive suitable retirement advice could have an extra $200,000 in their super account by the time they retire.
Billions in payments
Otivo claims that right now only 2 per cent of fund members are receiving advice from their funds. Mr Feeney says personalised advice on making extra super contributions could result in an extra $98 billion a year in super payments.
“The goal should be to enable any member of any super fund with access to more support – comprehensive and quality financial advice,” says Mr Feeney.
“What we’ve found is that many Australians don’t treat their superannuation fund like they do their bank.”
Mr Feeney says that too often people choose a fund and ‘set and forget’. He says he has some clients who didn’t even know how much they had in their super account when they joined Otivo.
“Imagine if every Australian had a financial plan. How much better off would they be, and how much better would the wider Australian economy be?”
He says Australians should be better educated about financial literacy to ask their super funds the right questions.
“Super funds should be providing personalised advice to their members, which is built around its members’ personal circumstances at any point in time, and can be adapted as life changes.
“It’s time for super funds to arm their members with the right information to grow their wealth by the time they retire.
Not just about retirement
“Super is not just about retirement. It can play a pivotal role in everyone’s financial lives while they are working.
“After all, no-one retires on their super fund alone.
“Super isn’t just about the member, it’s about their partner and their family – inclusive of other investments, the Age Pension and so on.
“All of these factors make a significant difference to a person’s retirement.”
The federal government has also criticised super funds’ general lack of communication with members.
Minister for financial services Stephen Jones says super funds should be doing more on member satisfaction.
He says an Australian Securities and Investment Commission (ASIC) survey found almost 20 per cent of super funds consistently fail to respond to members’ complaints within the mandatory 45-day timeline. Almost half of those delays were not explained by the funds, also as required.
“When ASIC dug deeper, it found almost 80 per cent of funds’ complaint management systems were not up to scratch, says Mr Jones.
“This needs to be a wake-up call for the industry. Doing right by your customer should be a no-brainer for any business, and that goes double for super funds.”
“Survey after survey shows Australians’ engagement with their super fund is low, especially among younger Australians.
“More strenuous efforts must be made to address this situation, because when members engage with their super fund, everyone wins.”
Mr Jones says super funds need to:
- focus on members
- respond to complaints more quickly
- invest more in their relationship with members
- do better at understanding the needs of those who trust you with their contributions.
Have you sought advice from your superannuation fund? Did you find it satisfactory? Why not share your experience in the comments section below?
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