Super funds need to start collecting data on ethnicity so important messages about contributing to super can be targeted to Indigenous people.
Only two super funds are currently collecting this type of data, which can help create an entry path for Indigenous Australians to more accessible products and services, said Amanda Young, chief executive officer of the First Nations Foundation, a charity that aims to bridge the gap between the financial services sector and Indigenous Australians.
Studies such as Siobhan McDonnell’s in 2003 into banking among Indigenous communities, found that many Indigenous people struggle with financial literacy, while regulatory requirements, such as proof of identity, can create barriers and create challenges for financial institutions.
According to research by National Australia Bank, 43.1 per cent of Indigenous Australians are fully or severely financially excluded, compared with 17.2 per cent of the rest of the population.
“Our charitable aims are to build the financial literacy foundation for First Australians so they can engage meaningfully with your sector,” Young said.
“Most of all, we need your sector to lead and champion the way, partner with us and support our work. We run Indigenous money management training programs, hold a superannuation-focused event called Big Super Day Out and find solutions to financial exclusion.”
She added fewer than 30 per cent of Indigenous people are likely to achieve the Association of Superannuation Funds of Australia’s (ASFA’s) modest standard of living in retirement, with a high dependence rate on pensions expected.
Research from ASFA shows superannuation coverage for Indigenous Australians is about 66 per cent for men and 55 per cent for women, compared to rates of 85 per cent for men and 80 per cent for women for the population more generally.
[tv playlist=’55c989c3150ba0fb768b458c’ theme=’im_article’]
The mean balances were also lower, with Indigenous men having close to half the amount of the general male population ($66,456 compared to $130,000). While the gap between Indigenous women and the general female population was not as pronounced – $45,377 and $75,250, respectively – this is most likely a result of both sections of society being underserved by the system.
The issue of how best to serve Indigenous people has been rising in financial services, with the Australian Institute of Superannuation Trustees (AIST) hosting the inaugural Indigenous Super Summit in 2015, and another planned for 2016.
The 2015 summit was supported by AIST, ASFA, the Financial Services Council, Industry Super Australia and Women in Super alongside a number of super funds, for the purpose of establishing what the unique requirements of Aboriginal and Torres Strait Islanders are and meeting these specific requirements.
This Indigenous superannuation working group surveyed 27 super funds last year and concluded:
- The identification of super fund members as being of Aboriginal or Torres Strait Islander origin is not widespread. Only two of the surveyed super funds collected such data
- Only four of the surveyed super funds have developed specific initiatives targeted at their Indigenous members, with one fund producing tailored communications, a dedicated webpage, seminars and worksite visits
- One fund advised of an internal process whereby Indigenous identification issues were escalated to the trustee
- A number of the funds surveyed indicated that they had experienced problems in maintaining contact with Indigenous members. Funds also indicated issues around providing access to insurance benefits
- Six respondents indicated that Aboriginal or Torres Strait Islander members had experienced difficulties making claims for insurance. Five respondents indicated that they had experienced difficulties settling insurance claims for Aboriginal or Torres Strait Islander members
- Survey respondents commented that funds experienced difficulty identifying members and their beneficiaries due to inconsistent names and dates of birth on documents. Determining family relationships to identify possible beneficiaries as well as the prolonged time to meet requirements such as estate details were also identified as challenges
- Seven of the surveyed funds accept Indigenous identification cards such as the Larrakia Nation’s card to verify a person’s identity (in conjunction with other sources of identification)
- Four of the funds surveyed have an Indigenous employment strategy in place
- Three of the funds surveyed had a reconciliation action plan
- The overwhelming majority of funds surveyed indicated an interest in continuing to participate in initiatives to improve access to superannuation for Indigenous people.