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Higher value Super members rate performance of industry funds ahead of retail funds

Source: Roy Morgan Single Source (Australia), 6 months to August 2014 (n=16,754)

The satisfaction of members of industry superannuation funds with balances of more than $5,000 is well ahead of retail superannuation customers with similar balances. For amounts under $ 5,000, retail funds satisfaction levels are ahead of industry funds but this segment holds only 0.2% of the total money in superannuation funds.

These are the latest findings from the Roy Morgan Single Source survey of 16,754 interviews with people holding superannuation conducted in the six months to August 2014.

Superannuation Satisfaction, Industry Funds V Retail Funds

Satisfaction with superannuation increases with amount held, with both industry funds and retail funds having their highest satisfaction levels among people with balances of $700,000 or more.

The following chart shows that for all balance levels over $5,000, satisfaction with industry funds exceeds retail funds by a clear margin.

Satisfaction with Financial Performance of Superannuation - Industry Funds vs Retail Funds

superannuation satisfaction by amount held

Source: Roy Morgan Single Source (Australia), 6 months to August 2014 (n=16,754)

The biggest lead in satisfaction that industry funds have over retail funds is at the top end where among the $250,000 to $700,000 group the gap is 8.5% points (73.6% compared to 65.1%). In the $700,000 and over segment the lead by industry funds is 8.4% points (84.4% compared to 76.0%). It is worth noting that these high levels of satisfaction can be compared very favourably with self-managed funds where the satisfaction level for the same period is 79.2%.

Who holds the superannuation funds?

The superannuation funds held by members show a major skew to the top end. This is an important point to understand when looking at satisfaction levels because the high value members ideally should have the highest satisfaction levels in order to reduce the chances of them switching.

Although more than six out of ten (64%) people with superannuation have balances of less than $100,000, they account for only around one fifth of the dollars (19.8%)held in superannuation.

Distribution of Superannuation Funds: Share of Funds V Share of Members

share of superannuation dollars

Source: Roy Morgan Single Source (Australia), 6 months to August 2014 (n=16,754)

At the top end of the scale, where self-managed funds are making major inroads, these people with $700,000 or more in superannuation account for only 2.5% of people with superannuation but have 16.6% of total balances.

The people who have $250,000 or more in superannuation account for just over half of all funds (51.3%) but represent only 14.4% of total customers. This shows the significance of making sure that these people at the top should be targeted to achieve the highest levels of satisfaction if funds are to be retained and attracted.

The best performing industry funds

Roy Morgan Research measures the satisfaction levels of a large number of retail and industry superannuation funds. The following chart focuses on the performance of some of the major industry funds.

The best performer of these funds is Cbus with 63.3% satisfaction, followed by Unisuper with 61.3%.

Satisfaction with Financial Performance of Major Industry Funds

top industry superannuation finds

Source: Roy Morgan Single Source (Australia), 6 months to August 2014 (n=16,754)

Three of the major funds scored below the industry average of 56.6%, they were SunSuper (53.0%), REST Super (49.2%) and HOSTPLUS (47.2%). The Australian Super satisfaction was just above average with 57.4%.

Norman Morris, Industry Communications Director, Roy Morgan Research, says:

"The outcome of the intense competition in the superannuation market between industry funds and retail funds will ultimately be decided by consumers. Our research shows that at this stage, industry funds are viewed much more favourably in terms of performance by their members than are clients of the retail funds. Of particular significance is the fact that industry funds have their biggest lead in satisfaction at the top end of the market where members hold more than $250,000 and who account for just over half of funds in superannuation.

"It is this top segment that is the primary group facing significant losses to self-managed superannuation funds, making it imperative that both industry and retail funds maintain a strong connection with them if they are to avoid losses.

"We have seen in our research that poor investment performance and associated issues relating to fees and charges are important motivators in switching superannuation providers."

For comments or more information please contact:
Roy Morgan - Enquiries
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About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2