ASIC is concerned that many Australians may not have the information they need to make confident and informed decisions about retirement after a review identified a lack of urgency in improving retirement communications among superannuation trustees collectively responsible for millions of members.
ASIC's review, Report 818 From superficial to super engaged: Better practices for trustee retirement communications (REP 818), found some trustees offer one-size fits all retirement communications aimed primarily at pre-retirees, missing opportunities to engage with members throughout retirement and provide more meaningful support.
ASIC Commissioner Simone Constant said, 'Over 1.5 million members are in the retirement phase now, collectively holding approximately $575 billion in superannuation assets, and more than 2.5 million Australians will enter retirement over the coming decade.
'However, ASIC's Moneysmart research suggests only one-third of Australians on the cusp of retirement are confident that they will be financially comfortable once they leave the workforce. It is important now more than ever for superannuation trustees to focus their attention on providing meaningful, and timely retirement communications to their members that can meet their needs.
'Moreover, members entering retirement typically hold larger balances, require more tailored solutions and expect high-touch support. Trustees that can meet these needs stand to unlock powerful commercial outcomes: stronger member retention, deeper engagement, and scalable growth.'
ASIC's review also found little evidence of trustees tailoring their messaging and delivery methods to meet the diverse needs and preferences of their member base, including those already in the retirement phase.
Commissioner Constant said despite the retirement income covenant (covenant) obligations commencing over three years ago on 1 July 2022, some trustees are yet to address gaps identified by ASIC and APRA (24-143MR).
'The clear message we are sending to super trustees is a one size fits all communications approach won't work for all member groups as it may not provide the quality of information customers need to make confident and informed decisions about retirement,' she said.
'Trustees have developed significantly fewer communications targeted at retired members. Most of these targeted communications were more relevant to members in the lead up to, or in early stages of retirement, which given the size of the retirement wave already breaking, is a real missed opportunity.
'It was disappointing to see the retirement communications practices of participating trustees largely overlooked the specific needs of First Nations members, vulnerable members and culturally and linguistically diverse members. None of the trustees we reviewed developed specific retirement communications for vulnerable members.'
Commissioner Constant said effective data and research capabilities were critical in producing meaningful insights for driving strong member engagement, and removing barriers for vulnerable groups.
'Some trustees demonstrated how individual retirement communications were tailored to some of these groups and others demonstrated innovative approaches to member engagement, like offering webinars, in-person seminars, TV programs, and radio and social media content,' she said.
'However, we saw little evidence of wider processes in place to identify vulnerable groups and adequately support them with tailored retirement communications.'
Commissioner Constant said it was concerning that one third of trustees did not have a formal process that considered member feedback.
'Super trustees cannot understand member needs if they do not have processes in place for identifying specific challenges faced by diverse groups, particularly the most vulnerable among us,' she said.
'Ultimately, our review found that trustees with robust governance, strong data and research capabilities and effective benchmarking are delivering better communications, and in turn supporting better retirement outcomes for their customers.'
ASIC is urging trustees to carefully consider the calls to action and better practice case studies outlined in this report to identify and address blind spots in their retirement communications.
Calls to action for trustees include:
- focus on informing members about retirement, rather than prioritising product promotion and member retention
- develop retirement communications that are better tailored to member needs, using meaningful member groups and nudges
- better tailor retirement communications to the diverse needs and preferences of member groups approaching, and in retirement
- ensure retirement communications are accessible to culturally and linguistically diverse members and members with a disability
- adequately resource governance structures to execute the retirement income strategy and communications strategy, with appropriate oversight by executive and management-level staff, and
- strengthen oversight of external service providers that develop and deliver retirement communications to ensure the communications meet quality, compliance and strategic expectations.
ASIC is committed to working alongside APRA to hold superannuation trustees to account for compliance with their covenant obligations, including by publishing results from the latest joint Retirement 'Pulse Check' later this year.
ASIC's Moneysmart has conducted extensive consumer research with the pre-retiree segment that found there was a need to demystify complex financial concepts, and provide practical, actionable guidance. That was particularly the case for First Nations, vulnerable and culturally and linguistically diverse communities.
Based on consumer feedback, Moneysmart has updated its content pages to assist First Nations communities with actionable guidance on retirement and insurance, and will continue to build out new content to meet consumer needs.
