New data from Roy Morgan’s Superannuation Satisfaction Report reveals a decline in overall super fund satisfaction.
The report shows a satisfaction rating of 65 per cent, a decrease of seven points from the record high reached in January 2022.
Despite this decrease, the satisfaction level remains significantly higher than the long-term average from 2007–2023, which stands at 58.1 per cent. It is also higher than at any time prior to the pandemic years of 2021–2022, when satisfaction ratings were at record highs. However, it is worth noting that superannuation satisfaction is at its lowest point in two-and-a-half years since December 2020.
What’s causing this decline in super satisfaction?
The decline in satisfaction over the past year-and-a-half can be linked to interest rate increases implemented by the Reserve Bank of Australia (RBA). These increases have raised official interest rates to 4.1 per cent – the highest in over a decade. It may also be linked to stock market volatility and decreased customer service as a result of fund mergers.
Satisfaction breakdown by category
Industry funds saw a decline in satisfaction of 7.4 per centage points to 66.8 per cent, compared to the peak in January 2022.
Self-managed funds also experienced a decrease of 5.6 percentage points, although they still maintain the highest customer satisfaction rate among the four categories at 74.4 per cent.
Public sector funds, on the other hand, saw the largest decline, with customer satisfaction falling by 7.9 per centage points since January 2022 to 71.2 per cent, its lowest level in three years.
Customer satisfaction for retail funds declined by 7.3 per centage points to 59.6 per cent, although it remains significantly higher than the long-term average for this category, which stands at 54.9 per cent.
Despite declines across all categories, self-managed funds and public sector funds continue to exhibit higher satisfaction levels compared to other categories.
Keeping dissatisfaction in context
Roy Morgan CEO Michele Levine says that while customer satisfaction with superannuation funds has dipped from the record high of January 2022, it’s important to note that satisfaction levels remain well above the long-term average of 58.1 per cent.
“The superannuation industry will continue to consolidate in the years ahead as larger players in the market look to increase their clout and the amount of assets they have under management in an increasingly competitive industry,” says Ms Levine.
Looking ahead, Ms Levine points out that the superannuation industry is expected to undergo consolidation, with large players aiming to increase their market influence and assets under management. She emphasises the importance of effective communication and a smooth transition process for members during these mergers.
“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,” she says.
What lies ahead for the super industry?
Several challenges face the economy, including potential slowdowns in China impacting commodity exports and concerns about the value of commercial real estate as remote work continues. Inflation also remains a significant concern.
The Australian Bureau of Statistics (ABS) estimates inflation to be at 6 per cent in the year to the June quarter 2023, down from the 32-year high in December 2022.
“If inflation were to remain elevated at these levels in the period ahead, that would increase pressure on the RBA to increase interest rates once again despite a widespread expectation that the cycle of interest rate increases has now ended,” says Ms Levine.
The industry is expected to evolve, but a focus on maintaining high customer satisfaction and delivering better investment returns is imperative, especially in an increasingly competitive landscape, Ms Levine adds.
Are you satisfied with your super fund? If not, what’s causing your dissatisfaction? Why not share your thoughts on your super fund in the comments section below?
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