An ASIC review of communication sent by super funds to members about the Protecting Your Super reforms has found some “common problems”.
The ‘Protecting Your Super Package’ (PYSP) reforms were aimed at protecting small superannuation accounts from erosion due to fees and insurance, and reducing the number of unintended small accounts. This was done by targeting accounts with balances under $6,000, and accounts that had been inactive for at least 16 months.
ASIC conducted a review of super fund communication with members about the PYSP reforms, because of concerns that “unbalanced” communications could “undermine the effectiveness of the PYSP Act in producing benefits for members”. This outcome of this review has now been released.
ASIC Commissioner Danielle Press said, “A superannuation trustee’s approach to member communications is critical for the success of the PYSP reforms. Our review found some good member communication. However, there were some common problems with the material we reviewed, which suggested trustees are not always sufficiently focused on their members’ needs.”
“Many Australians, including those targeted by the PYSP reforms, are not engaged with their super – it is unclear which piece of communication a member may read. So it is all the more important for trustees to get their communications right. They must ensure that their members are not exposed to unbalanced messages in any communication they receive.”
“We are reminding trustees to balance their focus on their own operational priorities, such as growing the number of member accounts or maintaining certain insurance arrangements, with ensuring benefits for those members targeted by the PYSP reforms.”
The ASIC review found that some super fund trustees didn’t give members “appropriate context and balanced communication”, including failing to explain the purpose of the PYSP reforms, only providing a limited range of options, or failing to highlight the impact of “account proliferation”.
Some trustees “placed insufficient emphasis on members’ needs”, including a focus on compliance – what ASIC refers to as “bare minimum” messaging.
“Many” trustees failed to give information that would have helped members. “They didn’t provide members with relevant details on their existing superannuation arrangements, including last contribution date, their current premium, benefit levels, key terms and exclusions in their insurance coverage.”
The review involved a “broad” range of communications from 12 super funds, which had a total of around six million member accounts. These funds – which ASIC doesn’t name – were chosen because they had a “relatively high number on inactive accounts”.
ASIC says it will provide feedback to trustees covered by the review “directly”.
The PYSP changes, announced in the 2018/19 Budget, were estimated to raise either $850 million or $1.75 Billion for the Budget over the forward estimates, depending on which calculation method was used.