CBUS has gained a 97 per cent approval rate from members for statements which confront them with an estimate of their income in retirement in today’s dollar value.
The building industry fund conducted the exercise with 20,000 members to raise awareness that taking the lump sum was not the only option on retiring.
Since the statements were sent in June 2013, CBUS has registered a jump in engagement from the control group; 12 per cent have raised contributions, 10 per cent have changed investment options and 14 per cent have contacted the CBUS advice team, while close to all thought CBUS should continue sending out such statements.
Sean Leonard, general manager, product and business insights at CBUS, was pleased by the feedback, as the intention was not to overly scare members.
“We did not want to put this in their hands and confirm the future was bleak and superannuation was of no value,” he said. “We seem to have got the message through to them that there is a lot more to know about their financial circumstances, that they should use calculators and get information about their superannuation to fill in the picture.”
The exercise is encouraging the fund to roll out the statement to more members, but one potential barrier is restrictions from the Australian Prudential Regulatory Authority on sending them to members with small balances. Leonard said they would speak with APRA to overcome any such hurdles.
He said the exercise was about changing perceptions: “We have spent 25 years educating members that super is about a lump sum and now we need to start educating them that super is also about providing an income in retirement.”
According to Nick Callil, head of retirement income solutions at Towers Watson, which assisted Cbus with the income calculations, more funds are expressing an interest in providing such estimates.
“Though there are some complexities to be addressed, particularly on the data side. We think issuing paper-based estimates is a very effective way for funds to promote a retirement income focus among their members,” he said.