Australians’ lack of interest in their superannuation is increasing with each passing year, and young people are particularly disengaged with preparations for retirement, according to recent research conducted by global market research firm CoreData.1
Research shows funds high on quality, low on member engagement
Australia’s super system is considered one of the best in the world, ranking third on the Mercer Melbourne Global Pension Index 2016, behind only Denmark and the Netherlands2. This is backed up by CoreData’s research, which suggests that although the quality of Australian funds is not in question, they are lacking on the communications front, leading to increasing levels of disengagement among members.
CoreData’s research revealed that the proportion of disengaged members has jumped from 43.7% to 48.5% over the past year, with the number of members identifying as “highly disengaged” rising to nearly one-quarter (23.8%), up from 18.8% in 2015. Not surprisingly, pre-boomers are the most engaged generation (75% engaged), whilst gen Y members are the least engaged (41.3%).
These results make sense. To younger generations, the concept of retirement seems more and more remote, so putting aside their hard-earned money in their 20s and 30s for a time that may never come is unappealing. Trying to engage younger members with their super as a tool for retirement is no longer logical. These generations are more concerned with choice and financial freedom, at any age.
“The marketing of superannuation to young people as a retirement vehicle is outdated and fails to resonate with a generation that has grown up in a social media world of instant gratification,” says Kristen Turnbull, head of CoreData, WA.
“Super funds need to reshape the conversation they’re having with younger members to recognise that while retirement might be the last thing on their minds, the concepts of lifestyle choice, flexibility and financial freedom are highly valued.”
Looking more closely, the research also found that members’ overall satisfaction with fund communications has slipped from 73.8% to 71.8%, with lower scores across all communications channels. Members – particularly gen Y members –are craving more personalised content that is tailored to their specific circumstances and stage of life.
As in other service industries, the most effective way for funds to drive engagement among members of all ages is through customised newsletters, emails and website content. However the cost and time associated with implementing these solutions is often a barrier.
Mercer has spent recent years developing solutions for making this transition to personalisation much easier for funds to achieve. Through data-driven analytics, Mercer Edge provides a near real-time understanding of each member and his or her behavior, driving targeted campaigns that are relevant down to the individual level.
The platform has proven so successful that it was recently awarded the Marketing, Data & Business Analytics award for best practice in analysing and managing marketing performance at the 2016 Australian Marketing Institute Awards. But more importantly, Mercer Edge has proven results in driving better retirement outcomes for individuals, by increasing measures such as account consolidation, consent to search for super and salary sacrifice contributions.