Australia’s Superannuation Story Continues…
The superannuation story is changing significantly for the first time since it was introduced back in 1992. The very existence of a super scheme was considered revolutionary back then, because Australians would be able to save a pension plan for themselves, rather than relying on the struggling state age pension allowance, together with the rest of the aging population. Much has changed since then; the mindset of Australians and the structure of our employment landscape are the two main factors that have resulted in a super system seen as out of touch and far from meeting our retirement needs. So finally, the super story will be altered significantly, giving control back to the individual, and super brands are provided with an extraordinary opportunity to reap the benefit from customers keen for something different.
When the law changed some years ago, to enable Australians to choose their own fund, rather than being forced to just go with the fund that was company policy, super funds recognised the opportunity. They created enticing packages that they felt would appeal to Australians in the market for a super provider. However, despite their most innovative marketing efforts, and many millions of advertising dollars, some of their most important KPIs didn’t shift significantly enough. This is what made them realise that Australians (particularly younger Australians) don’t have particularly strong feelings about superannuation, even their own account. Most younger Australians felt they had little to get excited about, since the day they were allowed to finally access their super was so far away. Young Australians were likely to just go ahead with the same fund as their parents, or the industry or employer fund, or the one they were familiar with because they recognised the logo.
Now, probably the greatest changes are being introduced since super first entered the landscape. For the first time, each human will notice that their superannuation account is stapled to them, like their driver’s license or passport, rather than being attached to their job. Policy makers hope that we have more ownership of our super account, and feel responsible towards it. In turn, the hope is we will be more likely to contribute to it, in co-payments together with our employer, or indeed instead of, if we are self-employed.
Recent research by GWI has shown that millennials and the one that comes after, Gen Z (the greatest consumer collective currently) is the generation most likely to impulse shop, especially to pay for access to experiences they feel they need in their lives. Super funds marketing that appeal more to a sense of FOMO, rather than scare tactics in general, are likely to do better. Super funds will also need to create and market interesting and useful solutions that constantly evolve, since millennials and Gen Z have little sense of brand loyalty. They would do well to remember that their competitor is literally only ever a click away, offering ever changing experiences. Brands will need to work harder than ever to attract and keep attention to win that customer over. Something like super is not a quick, cheap and easy sell, and their point of difference can be abstract by nature, so super brands will need to work with expert experience designers to create the perfectly enticing solution and deliver it in a way that hits the sweet spot.
Importantly, millennials are choosing to do business with companies that are ethically invested — and if they are required (or promise) to be but aren’t, millennials won’t just brush it off. Whereas older generations may close their eyes to company objectives that are evaded, millennials are not prepared to do the same. Recently, a Brisbane-based Rest superannuation customer sued the fund over its handling of climate change, forcing it to commit to net-zero emissions for its investments by 2050. The law requires trustees of super funds to act with care, skill and diligence to act in the best interest of members — including managing material risks to its investment portfolio. This was the first time an Australian superannuation fund had been sued for not doing enough on climate change. This outcome should represent a significant shift in the market’s willingness to tackle climate risk — a shift which should set a clear precedent for the industry in Australia, and also pension funds around the world, as something present and future customers strongly value.
Millennials and Gen Z’s understand it’s not always going to be roses, all of the time. But don’t worry, they have lived through COVID and some more global disasters, and are still a positive bunch overall. All they request is transparency among all they do business with; superannuation is no different. Fortunately, the 2021 super reforms include a requirement for super fund administrators to provide more details about their investment decisions and how they were in the best financial interests of members.
Australians now are responsible for picking the fund that works for them, and the opportunity is for super funds to find out what customers want, create the solution and then share it in an effective way.
