The Royal Banking Commission has highlighted some painful and expensive truths about the superannuation industry, particularly when it comes to what trust, access difficulties, as well as how a lack of engagement and financial savvy are costing everyday Australians.
Last week, the Commission heard that many customers were paying fees when no service was provided, while others were advised into the wrong products and their savings eroded by inappropriate insurances and investment options.
Then there were thousands of customers, dead and “apparently” dead, including my very much alive Mother, who were charged ongoing fees for inactive accounts. Imagine getting a letter in the mail to your late estate – way to ruin a day!
On a personal note, it’s taken me one month of toing-and-froing to change my occupational status with my super fund, from full to part-time, in light of my decision to reduce my hours as a working Mum.
Making personal information changes to superannuation accounts is just one of the things that parents, particularly women, have to tackle when they change their work patterns upon having kids.
But many funds within the system itself don’t make self-help easy – let alone for the time poor multi-tasking parent.
The absence of widespread digital signatures and intuitive technology means that we are still overly reliant on paper forms that must be printed, scanned and either posted or emailed – it’s prehistoric in a digital age.
For me, the paper work change of my occupational status from “professional” to “office worker” now saves me $50 a month in insurance fees.
But realistically, and by my own admission, my lack of engagement and procrastination when faced with the paperwork has come about 6 years and $3600 too late.
The five things I needed to do after the birth of my first child were:
- Check what fees were being paid in my super fund for administration, investment and insurance
- Check if my investment option was appropriate
- Update my beneficiaries
- Compare fees and performance
- Check for any inactive of duplicate super funds
For women the need to engage with super should be high on the agenda, not least because of the scandals being highlighted in the superannuation industry but because on average we retire with 30 per cent less in savings than men.
Being a mother can often mean we are taking career breaks, and that often changes the type of work we do and how much we earn.
All of these things have the capacity to affect our personal information in superannuation and how much we pay in fees, not to mention insurance.
What’s needed are not just smarter technology systems, a review of incentives and regulations, but also greater transparency for customers including being able to compare the ins-and-outs of funds as well as performance, much more easily.