Rate rises, share market volatility and fund mergers have combined to dent customer confidence, Roy Morgan data shows.
Satisfaction with super funds plummets from record high
Satisfaction with super funds has plummeted from a record high one year ago to hit its lowest level in more than two years, according to the latest data from Roy Morgan.
Just two-thirds of members are now satisfied with their fund, the Superannuation Satisfaction Report reveals, a drop of 5.4 percentage points compared with January 2022.
Roy Morgan said the period covered by the ratings – September 2022 to February 2023 – included five interest rates increases and that was part of the problem.
Roy Morgan CEO Michele Levine said in addition there was volatility in the ASX 200 and a run of mergers among super funds, such as Unisuper taking over Australian Catholic Super and Hostplus merging with Statewide.
“The drop in customer satisfaction from a year ago has occurred as the ASX 200 experienced a period of volatility since mid-2021,” she said. “There have been declines across all categories from the record highs.
“As well as dealing with a volatile share market, many superannuation funds have merged or announced their intention to merge. One of the key messages coming through from these mergers is the importance of communication and a smooth transition process for members throughout.”
She said satisfaction levels were lowest for retail and industry funds while SMSFs maintained their lead.
“Retail funds are down 5.6 per cent points to 61.3 per cent and are the lowest rated category, while industry funds dropped 6.3 per cent points to 67.9 per cent – the largest drop of any of the four types of super,” she said.
“Self-managed funds on 74.7 per cent (down 5.3 per cent points) and public sector funds on 73.4 per cent (down 5.7 per cent points) remain the two sectors with clearly the highest satisfaction – well above the overall average.”
She said despite the fall in overall satisfaction to 66.6 per cent, it remained well above the long-term average of 57.9 per cent and higher than at any point prior to 2021.
However, the industry had a rocky road ahead.
“Looking forward the market faces a challenging environment with inflation at a 32-year high of 7.8 per cent in the year to December 2022 while the RBA has increased official interest rates by 3.5 per cent points in under a year to 3.6 per cent – the highest for over a decade since mid-2012.
“As well as high inflation and interest rates there is also emerging instability within the US and European financial industries in recent weeks following the sudden bankruptcies of two mid-sized US banks – Silicon Valley Bank and Signature Bank – and the bailout of giant Swiss bank Credit Suisse.”
“As the industry continues to consolidate in the years ahead, we are set to see more such mergers and acquisitions as the larger players look to increase the amount of assets they have under management in an increasingly competitive industry.
“The premium on maintaining a high degree of customer satisfaction and providing better investment returns will only increase.”
Roy Morgan said the highest placed retail fund was Macquarie, followed by MLC, OnePath, Colonial First State, Suncorp, Mercer and AMP.
Unisuper and HESTA had the highest satisfaction ratings among industry funds ahead of AustralianSuper, HOSTPLUS, Australian Retirement Trust, REST Super, Cbus, Catholic Super and CARE Super.
The report’s findings are compiled by in-depth interviews with over 60,000 Australians each year.