Members who are disengaged should not be disadvantaged and superannuation funds have a duty to provide members with clear information, according to the Australian Prudential Regulation Authority (APRA).
Speaking at the Fund Executive Associations Limited Members’ discussion forum, APRA executive member, Margaret Cole, said fewer members were engaged with their super fund as she had hoped.
She said super funds had a duty to ensure all members received clear, concise information which would improve member engagement and understanding of the super system.
“I would like to see more done to make sure that members get the benefit of clear, concise information in plain English,” she said.
“Information that is clear, independent of any political nuance, and aimed at capturing members’ attention, helping them understand how important this issue is for their and their families’ financial futures.”
Super funds should also be able to demonstrate and justify how their work, including brand promotion to reach new members, was in the best interest and benefit of current members.
“Being disengaged doesn’t mean a member should be disadvantaged. You need to constantly ask yourselves the question who are you here to serve and how are you prioritising the interests of your members.”
This came to light as a report by KPMG found that four out of five members of a merged fund were unaware their fund had merged and received information from their super fund on a quarterly, or less, basis.
Cole also many funds in the super system lacked scale and effective rivalry, demonstrated by the fact that many small funds would have disappeared by now if there was. This was despite much merger activity taking place in recent years and talk of mega funds on the horizon.
“116 or about 80% of APRA-regulated entities collectively manage a disproportionately small percentage (8%) of the total assets,” Cole said.
“At the other extreme, 13 funds with assets of greater than $50 billion collectively manage around 70% of assets.
“If there were effective rivalry and true competition in this market, many small and/or underperforming trustees would have disappeared off the list by now.”