Amid superannuation fund consolidation and a crackdown on poor member experience by the federal government, Roy Morgan research has revealed a near 10 per cent decline in member satisfaction.
A spate of superannuation fund mergers has dragged member satisfaction down over the past 18 months, with the research firm’s superannuation satisfaction index declining by 7 percentage points, to 65 per cent in July this year.
The Superannuation Satisfaction Report, based on responses from more than 16,000 members aged 14 or older with work-based or personal superannuation, has found the proportion who say they are “very” or “fairly” satisfied with their super fund is down from an all-time high of 72 per cent recorded in January 2022.
While this drop might raise eyebrows, overall member satisfaction remains above its 2007 to 2023 average of 58.1 per cent. Moreover, the rating remains marginally above pre-pandemic levels (2021 to 2022), when satisfaction reached a then-record high of 64.8 per cent.
The report reveals member satisfaction varies across different categories of funds. Industry funds have seen a 7.4 percentage point drop in satisfaction to 66.8 per cent since January 2022, while self-managed super funds (SMSFs) have seen decline of 5.6 per centage points, but members of SMSFs remain the most satisfied of all, with almost three-quarters (74.4 per cent) saying they are very or fairly satisfied with their fund.
In contrast, public sector fund member satisfaction experienced a 7.9 percentage point decline in customer satisfaction over 18 months, and now sits at 71.2 per cent.
This drop is the largest across all categories, and satisfaction in public sector funds stands at its lowest level in almost three years.
Retail funds experienced a 7.3 percentage point decrease in customer satisfaction, resulting in a 59.6 per cent satisfaction rating. This figure, however, remains notably higher than the long-term average of 54.9 per cent for retail funds.
Roy Morgan CEO Michele Levine emphasised in a media release on Wednesday that while current member satisfaction with superannuation funds has seen a decline since January 2022, it is still above its 15-year average.
“Despite the fall, [member] satisfaction remains well above the long-term average of 58.1 per cent and higher than at any point prior to 2021,” she said.
Levine highlighted the implications of recent fund mergers for member satisfaction.
“Roy Morgan has extensive data on the impacts these mergers have on the customer satisfaction of the super funds involved in the mergers and acquisitions,” she said.
“One of the key messages coming through from these mergers is the importance of communication and a smooth transition process for members throughout.”
Levine said the volatility of the ASX was a key factor influencing the fluctuations in member satisfaction. The ASX fall from a peak in August 2021 to a low in June 2022 and its subsequent recovery by July 2023 has played a role in shaping member sentiment.
Levine said that as merger activity is likely to continue, “for these larger and more complex superannuation funds to maintain a high degree of customer satisfaction and better investment returns will be more important than ever before”.
Other factors may also be at play in shaping member satisfaction, however. Some members with high account balances have begun leaving funds because they are not getting the level of service they expected, according to research house CoreData. This came as the federal government and regulators started putting pressure on funds to improve customer service.
Additionally, Minister for Financial Services Stephen Jones told the Retirement Conference, co-hosted by Conexus Financial and the Conexus Institute in Canberra earlier this month, that superannuation funds must provide forms of advice to members in order to meet their obligations under the Retirement Income Covenant.