The royal commission may well weaken public trust in superannuation, but it could also have the unintended consequence of increasing member engagement, says an academic.
Speaking to InvestorDaily, finance professor Susan Thorp from the University of Sydney’s Business School said the way the royal commission was framing the superannuation industry – as having “conducting its affairs in the dark” – was “likely to cause members some concern”.
“I think that the members who are paying attention to the royal commission might feel uneasy about how their superannuation is managed,” Ms Thorp said.
“It is the case that a lot of Australians have expressed trust in their super funds.”
Recent research from Investment Trends has shown that member satisfaction with their superannuation is on the rise – but that the intention of switching funds is also increasing.
“And to the extent that that is weakened by the royal commission, a variety of responses could emerge from that,” Ms Thorp told InvestorDaily.
She alluded to some research conducted by the University of Sydney that found people who were less trusting of their super funds were also more attentive, meaning greater monitoring of their accounts and staying on top of new updates and changes.
“I think that can be a really good thing, because people [will] start paying attention more to their super,” she said.
“So, although undermining trust is not necessarily an ideal outcome, where that’s warranted – where trust has been misplaced and people start to pay attention more – that can be a good outcome both for industry and for members of superannuation funds more generally.”
People didn’t pay attention what was happening with their superannuation funds for a number of reasons – one factor was that it was relevant more for the future than to the present, and another factor was the perception of super as complex and difficult to understand.
“To the extent that people start to pay more attention, that can help.”
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