Retirement might be 30 or more years away for half of Rest Super’s two million members, and when they do reach it they’re likely to have lower-than-average balances. With a membership that skews young, female and relatively low-balance, the fund faces specific challenges and opportunities in helping its members enjoy the best retirement they can.
Rest interim chief member officer Andrew Ford says the $93 billion fund’s strategy is to engage with members early in their working lives; to make it easy for them to interact with their fund; and to make superannuation concepts as simple as possible.
The age profile “creates incredible opportunities, because the earlier we start with a member, the more difference that we can make”, Ford says.
“Super is perceived as incredibly complex, confusing and no more so than when it gets to retirement,” he says.
“It is a whole new language that people, frankly, often don’t understand – ‘preserved’, ‘unpreserved’, all these sorts of words. We think the biggest opportunity is actually to make super simple and to make retirement simple, to demystify superannuation [and] to help people spend five minutes, 10 minutes, an hour, that can actually have a huge impact on the outcome that they get.”
But Ford says the profile also creates challenges “because younger members tend to have super further down the to-do list,” he says.
“Our strategy with younger members, particularly, is to get super on the radar and move it up from lower on the to-do list, to maybe above the line where you stop thinking about it as what could be, for a lot of younger members, considered life admin.”
Ford says the average Rest member’s account balance at retirement is about $110,000, well below the industry-wide average of closer to $180,000. It reflects the nature of Rest members’ employment patterns and the industries they work in, and the fact that about 60 per cent of its members are female.
As soon as they join
He says Rest thinks about its members’ preparation for retirement as starting as soon as they join the fund.
“We think of the retirement segment as, in a way, all members,” he says. “The moment you interact with super, you’re planning for your retirement, whether you’re aware of it or not.
“But particularly the over-50s is the area where we would start to think that retirement becomes very real, and your needs start materialise in your own mind around what you’re going to do when you work a bit less or stop working altogether.”
Rest has about 350,000 members aged over 50 – a cohort as large as some funds’ total membership numbers – but only around 20,000 members are currently in the fund’s account-based pension. Ford says this reflects another characteristic of the membership: with relatively low final account balances there’s a greater propensity for a member to withdraw from the superannuation system at retirement and use accumulated savings for immediate financial needs.
“A large proportion of members who reach retirement age have lower balances, so some of them take the money out of the superannuation environment to pay down housing debt, which a fairly significant proportion members now have going into retirement; or to meet other needs like that,” Ford says.
About a million Rest members currently have the fund’s app on their smartphones – a milestone the find passed earlier this year – making it a potentially deeply effective member engagement tool. And while it might be assumed that younger members are more likely to use an app, older members are also engaging with it, Ford says.
“The number one challenge with the over-50s is, in my mind, getting the attention of a member who may have a lower balance to say, this is something you should consider,” he says.,
“There are a variety of ways we do that, and a variety of content formats. For example, we run pre-retirement, retirement-planning webinars, and we’d regularly, when we run them, get 1000 members engaging in retirement planning content.”
Ford says Rest uses targeted short-form content pushed out through its app, including what it calls vodcasts, or video podcasts.
“We use every channel available to help members think about, well, maybe this is something that I need to consider,” he says.
“The [more] targeted that messaging can be to someone’s situation, the better. So we try and… really target messaging for what’s going to be relevant to a member. And we know that a combination of channels works better than any one channel alone. Engagement data tells us that.”
Conditioned by experiences
Something that is true about younger members is that their expectations of digital engagement are conditioned by their experiences with a wide range of other providers – from streaming services to social media platforms to dating apps.
“It’s a challenging benchmark for superannuation funds for a whole lot of reasons,” Ford says.
“But if we can build a digital experience that younger members love, then that will meet the needs of older members as well, albeit the content might be a bit different.”
Ford says tracking members’ use of Rest’s services has revealed some counterintuitive truths. For example, more than half of the fund’s total advice interactions were with members aged under 40; and about 20 per cent of total digital engagements were with members aged over 55, even though this cohort makes up only 11 per cent of the fund’s membership.
Ford says it underlines why funds need to be open to engaging with members at a time and in a place that suits the member, and in a cost-effective way. The same is true for financial advice, Ford says.
“I think of advice as on a spectrum, from little-a advice through to big-A advice, which is statement of advice, personal advice, within all those governance frameworks,” Ford says.
“We deliver advice across that spectrum in different ways. So little-a advice is as simple as a general advice team over the phone who can answer questions; but it would also include things like digital tools, calculators, self-help tools, retirement content on our website, which may be pushed out to individual members through the app and so on.”
Intrafund advice is delivered to members of any age and is charged for collectively.
“And then for members who require personal advice of a more, say, retirement-planning nature we also have a phone-based advice team, and they’re able to do advice,” Ford says.
Provided at cost
Given the nature of Rest members’ account balances, ford says advice is provided on an at-cost basis. It can range from around $200 for a transition-to-retirement (TTR) strategy, and less than $1000 for more complex retirement planning advice.
“If you were to look at the way advice is charged for around the industry more broadly by third-party advisers, holistic advice could be let’s say $3000 to $5000, depending on balance, and so on.
“That’s out of reach if your retirement balance is $80,000 or $100,000…so we try and really keep costs down to make advice more accessible to the Rest membership.”
Some of the broader, systemic challenges in delivering retirement solutions are being addressed legislatively, Ford says, through the government’s Delivering Better Financial Outcomes reforms. Last week it released draft legislation clarifying how funds can deliver so-called “nudges” to members, and the advice topics that can be delivered and be collectively charged for.
“We’re doing an analysis now of the announcements from last Friday, and working through what that means,” Ford says.
“Having clarity on issues like what advice can be provided through intrafund advice [and] what is the scope of exploration of a client’s circumstances, those things are very important for us to deliver a really effective service.
“Nudging members is important because that goes to the extent to which we’re able to talk to a member about their individual needs without triggering a very onerous compliance regime around personal advice on issues that should be regarded as fairly common sense.”
[LM1]@Simon Hoyle I think this part should be with the ‘incredible opportunities’ of the younger members
