This article was originally published in the print edition of Retirement Magazine Vol. 2

Walmart co-founder Sam Walton famously said that there is only one boss: the customer. By simply spending their money elsewhere, the customer can fire everyone from the chair down.

The takeaway is not so much “the customer is always right” as it is “always treat your customers right”.

Sam Walton passed away in 1992, the same year working Australians entered into the deal that we call compulsory superannuation.

The deal was this: give a portion of your pay to a superannuation trustee to invest on your behalf, and that trustee will grow it so that, eventually, it can fund your comfortable retirement.

In the thirty years since working Australians first entered into this deal, superannuation has grown astronomically. Now worth over $4.1 trillion, it is a structurally important part of Australia’s economy and a powerful engine of finance, driving investment towards major infrastructure, energy and health projects.

The scale is truly mind-boggling – we have the world’s fourth-largest pool of retirement savings in a country of just 27 million people.

But as superannuation becomes increasingly significant to Australia’s long-term economic success, we can’t forget the deal. North of 2.5 million Australians will retire in the next decade, and they’ll be relying on the super they’ve accrued over their working lives. This is why ASIC continues to sharpen our focus on member services, and why we continue to probe the ways trustees are communicating with those members nearing and in retirement.

As the custodians of the superannuation assets of Australians, trustees are the ones who make good on the superannuation agreement when their members reach retirement. It’s a matter of treating their members – who, at their core, are customers – right.

Governance is key to keeping the deal

Delivering positive retirement outcomes to members is not only about prudent investment. It is a communications challenge for trustees and, ultimately, a governance challenge.

It requires trustees to have insight into their members’ experiences, understand where they are on their retirement journey, and provide them with the information they need to get the most out of their retirement savings for as long as possible.

After disappointing results in both a 2023 thematic review and a 2024 pulse check looking at how trustees were implementing the Retirement Income Covenant, trustees told us they would improve their retirement communications. So, ASIC has drilled down into how trustees are communicating with their members to support them as they were approaching or beginning their retirement.

There are two key take-aways that trustees are on notice over.

First, it’s clear that many trustees are limping, not running, towards implementing the RIC. They’ve known for years that they need to improve their retirement communications, but they are not tackling the task with sufficient urgency.

Secondly – and perhaps most importantly – there is a golden thread between robust governance that places members at the centre of decision making and better retirement communications.

Structured approach

A structured approach to retirement governance clearly produced better, more targeted retirement communications.  This meant regular working groups to address operational requirements, monthly meetings to monitor metrics and analyse data, and a committee to provide strategic oversight, funding and resourcing.

With these arrangements in place, trustees were more likely to usefully track member behaviour and collect member feedback, creating a positive feedback loop for continual improvement in retirement communications.

However, most trustees don’t have a structure this mature yet.

Many of the trustees we’ve reviewed continue to lack the data to understand their members and evaluate the effectiveness of their retirement communications.

In practice, this falls even harder on the retirement communications with vulnerable cohorts, including First Nations and culturally and linguistically diverse customers.

These customers aren’t being identified, potentially missing out on the additional support they need.

It also means communications aren’t targeted to the right member cohorts. Members who have been retired for years are receiving information targeted to those who are approaching or just beginning their retirement journey.

And it means their retirement communications aren’t being effectively evaluated, in some cases being treated more like promotional campaigns than their legally mandated responsibility.

The benefit of robust governance is clear, and ASIC will continue to push trustees to improve their retirement communications.

Poor oversight can have dire consequences

The basic principle at the heart of these findings is that trustees need to make sure that their members – their customers – are treated fairly.

This means providing your members with accurate and useful information. It also means making sure you have appropriate oversight of external providers.

Most trustees use external service providers to provide retirement information to members, including marketing agencies to develop the messaging and design of retirement communications and external financial advisers to advise members about retirement products.

Outsourcing work is not a problem on its own, but trustees must have processes in place to oversee external service providers. Concerningly, many of the trustees we’ve reviewed have no documented oversight processes over these providers. When asked to prove their oversight, they came up short.

Such lack of oversight can have dire consequences for members. Look no further than the spate of failures ASIC has seen when it comes to processing death benefits claims.

Our review of death benefits claims handling from March found that trustees who outsourced death benefits claims handling services closed just 15 per cent of claims within 90 days.

In the most egregious cases, claims took hundreds of days to be finalised, leaving grieving Australians without access to money they were entitled to.

ASIC has made it clear – including in the course of enforcement proceedings related to death claim failures – that trustees are ultimately responsible for meeting their obligations to members.

They must have governance arrangements in place to ensure the third-party administrators and service providers they engage are doing right by their members.

Governance uplift is an opportunity

Superannuation trustees have been on notice since the Murray Financial System Inquiry in 2014 that change was required to improve retirement outcomes.

Trustees have made great strides in a number of areas since then, but retirement communications is not one of them. Progress has been slow.

This is frustrating in circumstances where the data we’ve seen shows that providing better retirement communications improves both member satisfaction and member retention.

The improvements ASIC expects of trustees lead to better outcomes for their customers and for business.

Trustees need to remember that the superannuation deal is not only about growing investments, but also about helping your members – your customers – fulfil their retirement ambitions. Without an uplift in governance, trustees risk letting down their end of this $4.1 trillion – and growing – deal.

Simone Constant is a Commissioner of the Australian Securities and Investments Commission (ASIC)