AustralianSuper is expecting to increase its membership to more than 4 million by 2030, with an increasing proportion coming from members who actively choose the fund rather than coming in via awards and default arrangements with employers.
In an interview with Investment Magazine, AustralianSuper’s chief member officer, Rose Kerlin, says the fund’s membership has grown by more than one million since the Hayne Royal Commission in 2019, to a record 3.3 million.
“We have a new member joining the fund every minute of every day,” says Kerlin, who has worked at the fund for more than 13 years.
“That’s more than 1,500 a day.”
With assets of $320 billion, AustralianSuper’s membership now represents almost 14 per cent of all super funds accounts in Australia and a significant 25 per cent of the membership of industry funds.
New source
Kerlin says there has also been a big change in the sourcing of new members over the period, with an increasing proportion coming in directly from people deliberately choosing to start with AustralianSuper or transfer into it later in their working life.
“It’s quite a seismic shift in the way the fund has approached its growth,” she says.
“If we go back to 2015, we only had 23 per cent of our members coming in directly, with 77 per cent coming in through businesses- being deemed in or defaulted in.”
“When the Hayne Royal Commission (into misconduct in the financial industry) was announced in November 2017, it was still more than 70 per cent.”
“Six years later, we have seen that trend on the way to being reversed.
“We now have over 50 per cent of new members who are joining the fund directly.”
Kerlin says AustralianSuper had invested heavily in promoting its brand to the broader marketplace.
“We have invested heavily in direct channels and new ways to go to market.”
“We have invested heavily in member engagement, we have over 30 engagement programs where we personalise our communications.
“We’re really focused on providing members trustworthy help and advice and digital enablement.”
Kerlin says the fund is expecting the proportion of new members coming in directly will rise to as much as 80 per cent over the next ten years.
Young members on the rise
Although she says it is too early to tell the impact of superannuation fund stapling, which effectively came into force in late 2022 after a one-year phase-in period, she says the fund has done well in acquiring new members in the under 25-year-old category.
She says the removal of the threshold level of wages of $450 a month for the payment of super, which came into force on July 1, 2022, also brought in a lot of new members.
“AustralianSuper has the second largest market share of under 25-year-olds, so we will be a continued beneficiary of stapling (as it benefits the funds used by first time workers).
“The abolition of the $450 a month wage threshold has also increased the contestable market.”
AustralianSuper’s number of accounts with people under 25 rose from 354,000 in the 2021 financial year to 395,000 in the 2022 financial year- a growth of 11.46 per cent.
In number terms, the growth was second to retail workers industry fund, Rest, which saw its numbers in this cohort rise from 611,000 to 650,000- a growth rate of 6.36 per cent over the year.
When it comes to the growth rate, AustralianSuper’s growth in this age group was second to the Australian Retirement Trust which saw its members in this cohort rise from 293,000 to 336,000 – an increase of 14.44 per cent.
Over the same period, BT saw its membership in the under 25 age group drop by 34.6 per cent to 52,000 and AMP saw its membership in this age cohort fall by 19.68 per cent to 52,000.
Kerlin says that younger workers are more engaged with their superannuation these days, and more likely to make active choices about their super fund than ever before.
She says there has been much more publicity around superannuation, making it a potential discussion point around the family dinner table, particularly since the royal commission and the introduction of the Your Future Your Super performance testing on July 1, 2021.
The skyrocketing cost of housing in most capital cities, is now making home ownership out of the price range of many younger workers, with superannuation now often their biggest single investment.
At the same time, their parents are taking superannuation more seriously as they accumulate much larger balances in their funds than ever before with the successive increases in superannuation guarantee towards 12 per cent of wages on July 1, 2025, discussing the issue more with their working age children.
Multiple acquisition venues
Kerlin says the advent of the superannuation performance tests in 2021 saw 13 funds named as underperforming, prompting their members to seek other funds.
“Many of those funds have consolidated or merged with another fund, but many of their members also looked for a new home,” she says.
“We were a major beneficiary of that as well.”
Kerlin says AustralianSuper currently has arrangements to provide super with some 470,000 employers across the country.
“We have contributing businesses of all different sizes,” she says.
“And we still participate in corporate tenders, so we have also seen continued growth on that side.”
Kerlin says the fund’s member engagement strategy has involved a big increase in focus on its digital capacity.
“We have improved our net promoter score and our customer satisfaction with a new business portal which many of our employers are using.
“We had a 39 per cent increase in views on that portal last year.”
The fund’s membership growth has also been driven by mergers with Club Plus in December 2021 and LUCRF in June 2022.
Kerlin says the dropping of the $450 wage threshold means that all Australian workers will start off with a super fund which can steadily grow throughout their working life.
She says the rolling out of new retirement products now means that members can have a lifelong relationship with their super fund.
“We are now having members who are going to be with us for 80 plus years.”
“We are getting them in when they are young and doing personalized engagement which makes sense for them.”
“It might be something as simple as budgeting tools and explaining what superannuation is and if they have the right level of insurance.”
Getting real with complaints
It has not all been easy riding for AustralianSuper over the past few years with the country’s largest fund getting a rap over the knuckles for the high number member complaints, particularly around insurance payments.
According to the Australian Financial Complaints Authority, AustralianSuper was the fund that received the most member complaints in the last financial year – with the rate of complaints per member more than double the average of other funds.
AFCA found that many of the complaints against super funds were as a result of insurance claims which were being handled by a third party, mainly the insurance company, not the fund itself.
AustralianSuper has responded with a range of new initiatives announced late last year, including creating an in-house bereavement centre to handle death benefit claims as well as bringing its complaints handling into an in-house member resolution centre.
“We want to make sure we are owning (the handling of) those really important times in people’s lives,” she says of the new bereavement centre.
“The last service we can provide for a member is if we are dealing with a death claim and we are dealing with a family member or a loved one.”
“We want to be digital first but also be member-led.
“We want to lift those areas so that members are getting the best possible experience.”
Kerlin says the fund was also stepping up its capacity to handle member inquiries.
“We have increased both our capacity and our capability in our claims area and our complaints area,” she says.
She says this including more staff training and reengineering processes to streamline insurance claims handling as well and complaints handling “in a very empathetic way.”
“We will have the insourcing of those two areas completed by June 30 this year.”
“But there is also a longer program of work we will continue to do in terms of uplifting the member service and the support model,” she says.
