Rather than trying to do it all and investing in member engagement in both the savings and retirement phases, funds may find their resources could be better allocated to other activities, like improving default outcomes and ensuring frictionless customer experience at key touch points.
1. Shift the engagement focus from accumulation to retirement
Our recent EY report, suggests that engagement in the lead up to and during the retirement phase would generally be more helpful than engagement during the accumulation or savings phase of a member’s superannuation journey. Engagement is not as actively sought by members in the savings phase and, with various regulatory changes over the last 10 years leading to default options around performance and cost supporting better outcomes, it is arguably less needed. Meanwhile, in the complex retirement phase there is more expected from individuals, leading to arguably less beneficial outcomes for retirees seeking to balance consumption and savings. As such, super funds may find it is more beneficial to focus most of their engagement activities on members who are moving into the retirement space and need to start considering how they will access and consume their savings. Helping members better understand what they will need and consume in retirement – whether that’s through education, guidance, or advice – could lead to better standards of living in retirement.
2. Invest in better default options
Given the reality of both member behaviour and government attitudes toward engagement in the savings phase, super funds may do better to invest in designing defaults that help maximise benefits to members. While this will require a substantial shift in strategy and mindset, funds that are willing to consider reallocating some of their resources from broad-based member engagement programs towards systems and processes that support smarter default options – particularly in the retirement phase – may find they are providing a service that will be more valuable, and more valued, in the long run. One example of this could be identifying well-constructed life stage solutions that shift asset allocation as a member’s risk profile changes with age. Another could be automatically converting members into account-based pensions at retirement – with higher drawdowns than the legislated minimums – unless the member actively chooses otherwise.
3. Moments of connection still matter
It’s important to clarify that reducing the focus on proactive engagement activities, doesn’t mean that super funds can afford to ignore their members in either the accumulation or the retirement
phase. There is a difference between interaction and engagement and, as with any service industry, getting member interactions right remains critical. Having simple, hassle-free processes in place for key touchpoints is essential and actions like being able to quickly and seamlessly update a change of address or employer, or make additional contributions, still matter when it comes to member retention. With the acceleration in the use of digital finance platforms in the wake of the COVID-19 pandemic, members also increasingly expect to be able to easily make these types of changes online, so funds should ensure they are also focusing on their digital customer experience.
