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Engagement activity less valuable for funds: EY
It would be more effective for superannuation funds to focus on building an attractive default fund than spending money to engage members in the accumulation stage, according to EY Australia.
In a report on member engagement, the consultancy firm said if funds were keen to actively engage, it was better to focus on members who were in the decumulation stage.
Speaking to Super Review, EY Australia partner Scott Glover said: “If you look at the accumulation phase, you are swimming against the tide trying to engage members and we would argue it’s not necessarily needed in this stage.
“If you look at the retirement stage, there is a need. There’s an action or activity that is needed to engage members to help them think more clearly about how they consume their savings in retirement.
“The argument that we're putting forward is, that's actually where there's a role to step in and have greater engagement to allow for better choices and more informed decisions as members step into retirement.”
The Retirement Income Covenant presented an opportunity for this as funds would need to consider how to encourage members to withdraw and spend their super.
He said it was possible funds had been overspending on trying to stimulate member engagement and instead, funds should identify interventions to help default accumulation members into better outcomes and put money towards better systems and processes.
“Over the last decade, there has been regulatory or legislative changes that have occurred in super around emphasising the role of defaults, reducing the number of duplicate accounts and driving greater transparency. That’s actually bearing fruit and there’s evidence those policy interventions are working,” Glover said.
“But, on average, members are probably no more engaged now than they were previously. So our view is there’s less value in trying to invest in engagement.”
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
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I partially agree with EY. I spent many years meeting with members at their workplace on a group or one-on-one basis and encountered general apathy and ignorance towards super. Despite this I helped members to tick off about 5 items they needed to monitor and where to find further info or advice. Education should continue to be important.
EY promotes developing an "attractive default fund" I wonder what that would look like?