Industry superannuation funds have built popularity among their members with satisfaction levels growing strongly in the year to February 2019.
New research from Roy Morgan showed member satisfaction levels with the financial performance of the not-for-profit industry funds over their retail competitors rose from 2 percentage points a year earlier to 6.4 percentage points in February.
The news comes after it was revealed that $11 billion had flowed into the industry fund sector from retail funds following revelations of consumer rip-offs during the Hayne banking royal commission.
That caused many members to lose faith in retail funds.
Roy Morgan found that overall, industry funds were the only category that increased their satisfaction levels. Retail and self-managed super funds lost ground.
Industry funds with medium to high balances recorded the strongest satisfaction levels.
“The sweet spot for industry funds is among those with a balance in the range of $250,000 to $699,999, where their satisfaction rating is 77.9 per cent and their lead over retail funds is 12.9 percentage points,” Roy Morgan director Norman Morris said.
The retail-fund sector witnessed declines in satisfaction at all levels.
The biggest was a drop of 14.3 percentage points for members with balances under $5000. There was also an 8 percentage point decline for retail funds with balances of $700,000 and over.
However in this category of very big balances, self-managed super funds (SMSFs) had higher satisfaction levels than industry funds, at 82.1 per cent. And while satisfaction levels actually fell for all fund types at that level, SMSFs experienced the lowest falls.
UniSuper is the top performer in customer satisfaction. It recorded a 71.2 per cent rating while HESTA, Cbus, Tasplan and First State made up the top five in the satisfaction stakes, all with ratings above 65 per cent.
Of the top 15 funds by satisfaction levels, 10 were industry funds. The five retail funds in the top 15 were Macquarie, IOOF, Plum, Colonial and Mercer.
Eight of the 15 best-performing funds showed improved satisfaction over the past year, with the biggest gains for HESTA (up 6.6 percentage points), Plum and Sunsuper (both up 4.7 percentage points) and UniSuper (up 3.4 percentage points). The biggest losers were Macquarie (down 10.7 percentage points), Tasplan (down 10.2 percentage points) and IOOF (down 9.7 percentage points).
Over the past year, industry funds have gained ground in funds under management and accounted for total balances of $629.6 billion or 23.7 per cent of the total market, as of December 2018.
They have for the first time surpassed retail funds, which now total $589 billion under management.
“The biggest segment of the market is in fact the SMSF sector with current balances of $726.5 billion or 27.4 per cent of the market,” Mr Morris said.
Investment returns for SMSFs are likely to fall if a Labor government is elected and the policy cashing out unused dividend franking credits is scrapped, as the party has pledged, he said.
Overall satisfaction levels in SMSFs were high in part because they were found to only service people with balances higher than $100,000.
Those with lower balances than this reported overall lower satisfaction levels in all fund types.
The latest official figures show that industry fund members’ account balances average $51,000, while retail funds average $54,000 and public sector funds average $173,000. SMSFs average $722,000.
The New Daily is owned by Industry Super Holdings