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Wednesday, 8 December 2004
Page: 45


Senator HOGG (1:01 PM) —I rise today to speak of a very important launch by three of the major superannuation industry funds in Australia, entitled Key Education, which took place in Sydney on 24 November. I have always had an interest in superannuation because it is one of the keys for people's whole-of-life security—their security in retirement. It would be fair to say that the Key Education program which was launched by these three major funds was a response to the looming choice of superannuation funds legislation which will come into operation from 1 July next year. The three funds involved were REST, which has 1.4 million members and assets of $7 billion; Superannuation Trust of Australia, STA, which has 450,000 members and $5.5 billion in assets; and Sunsuper, which has 700,000 members and $5 billion in assets. These funds came together, in spite of being competitors, to put this program together. The three funds have one thing in common, being industry funds, and that is to maximise benefits for their members.

The program that evening was very well organised, and I want to briefly go over some of the highlights of the evening. Firstly, there was a presentation by the three funds conjointly for the launch of the Key Education program. People should become aware of this because it really is the key to them being able to maximise their superannuation in the longer term. They presented a fairly glossy brochure which summarised the arguments and the issues involved. In it they said:

REST, STA and Sunsuper have gone back to basics. We have asked Australians about the information they receive from their super funds and what they do with it. Their responses confirm that the solution does not lie in producing more material.

That is fairly important because people can become weighed down with information and material and are really none the wiser about the way in which they should invest their superannuation. Of course, that will impact greatly on their lifestyle when they retire.

They then outlined the basis on which the program was developed. They conducted a survey of their members called the 2004 members education research program, which was conducted by Roberts Research Group. Part of the reason for this, they said, was that the first step of the program was designed to assist the three funds to develop `a “voice in the market” as a source of member education'. Education really becomes the basic thing that many members of superannuation funds need, because very few people really understand how their superannuation fund operates or the marketplace. They went on to say:

Specifically, the current research sought to assess the attitudes of employed Australian adults towards superannuation, the level of engagement—

because, unfortunately, while many people's superannuation funds have been growing, the level of engagement has not necessarily been all that high to date—

and the extent to which their main superannuation fund was presently attempting to educate them about investing in superannuation.

They were the goals of the research that finally led to the launch of the program itself. They did a national random sampling of people 18 years of age and over who worked at least 20 hours a week, so they were targeting people who would be receiving superannuation, and they received a fair response from those people. Four hundred interviews were conducted between 21 and 27 October 2004. Most of those interviews, I understand from their promotional material, were conducted by telephone and averaged 13 minutes in length. So the survey was not done haphazardly; it was done very professionally and the results of that survey are important for many Australians.

I will go briefly through the findings which are outlined in the brochure that they have supplied to many of the people not only in the superannuation industry but also in employer organisations and unions, and to the politicians who turned up to hear the outline of the program. Some of the findings are disturbing. They said:

• 57 % of Australian super fund members feel they have a less than adequate knowledge of super.

That is very concerning given that we are going down the path of choice of fund and that this survey finds that 57 per cent of people believe they have `a less than adequate knowledge' of superannuation. That really raises the question that I raised in the debates that took place on the choice of super fund legislation: how are ordinary Australians going to cope and deal with what they will be confronted with post 1 July next year? They went on to say:

• Among the members under 30, only 2% believe they have anything better than an adequate knowledge of super.

So in that young group—and many young people do get superannuation—there is clearly a lack of knowledge and understanding of what happens in super. In this regard they found:

• 85% recalled receiving information from their main fund in the last 12 months. 53 % read less than half of what was sent, including materials available on the web.

•59% were not confident they could distinguish between information that was accurate or in accurate.

• 63% believed financial planners would provide information which was in their self interest or that of their employers.

Again, that is one of the concerns that arises with choice of fund. They further found:

• 46% were unable to agree that information sent by super funds had the members' best interests at heart.

Last but not least in the document they reported:

• 64% said that given their present level of knowledge they were uncomfortable making a choice of super supplier.

So there is a great reluctance among people out there in the community to choose a fund for their superannuation. They do not believe that they have the knowledge that they should have to enable them to do so. I think those are fairly important findings.

It is interesting to then look at what they had to say about finding the key for these people. They said—and again I quote from the brochure—that `there is no shortage of information about investments and superannuation available to Australians'. I think that is quite true. But they went on to say:

Unfortunately, much of this information is not as useful as it could be—it's like a maze and many people struggle to see the relevance to their situation. The result is that financial literacy remains at alarmingly low levels and many Australians are not preparing for retirement.

Of course, superannuation is one of the major bases of savings for Australians now, with other savings being absolutely at a low. Then they went on to outline what the program will do:

Education Key is about helping members in an environment where they have more choices than ever before and the consequences of making a poor decision are more critical.

That is because superannuation is the only retirement benefit that many people will have. If the snake oil salesmen and saleswomen—as was likely to happen back in the early eighties—get their fingers on the superannuation of many people, as may well happen post 1 July next year, then of course many people's retirements will be placed in jeopardy. The three major superannuation funds adopted a very positive approach in saying:

We genuinely believe education begins and ends with our members. We are passionate about listening to their needs and taking the time to talk with Australians from all walks of life to discover how educational materials can be made more relevant and accessible.

They went on to say, and this is terribly important as it separates them from many of the other insurance firms:

In line with our all-profit-for-members philosophies, the shared program enables the three funds to deliver high-quality, low cost education to members.

So the program that was launched was about delivering education to members in a changing environment which has been brought about by this government—prematurely, I believe, as I have said in previous debates, because the Australian work force do not have the literacy and numeracy skills to be able to make proper judgments as to how their superannuation should be invested. That is not to say it should not be invested wisely, but it is about being able to make the choices given the pressure that some of them will be placed under. In going on to describe Education Key, which is the name of the program, they said:

It is a customised financial education program designed to keep in touch with super fund members throughout their working life and into their retirement—

and of course superannuation is a lifelong product. They outlined in the brochure a number of the features of the program. They said that it should be comprehensive, and they said:

A central library of materials leverages the substantial resources of the three funds.

This was a significant factor. Whilst these funds were in competition with each other, they saw that it was wise to come together in harnessing their capacity to educate their members collectively, thereby not only streamlining the education process but also avoiding duplication and cost to the members of those funds. They also said:

The library consists of:

•Workplace and public seminars on the basics and latest developments in super and investments.

•Interactive workbooks to help members apply what they learn to their unique situation.

•Regular investment and economic commentary ...

•Legislative and policy updates ...

•Member campaigns and topical articles to keep members informed and ensure they continue to make the right saving and investment decisions.

•An online learning centre with streamed learning that suits different levels of financial literacy and competency.

Therein lies the critical issue: how the average Australian worker will be able to cope with the literature that they will be bombarded with, offering them great deals to move here, there and everywhere else in the name of so-called maximisation of their retirement benefits.

In their brochure they further said:

... to be effective an education program needs to be:

Integrated into the fund's regular service model

Tiered to cater for members' different levels of knowledge

Use personalised data and messages

Include face-to-face contact with an expert.

They covered the essentials of their program very well, in my view. They outlined a very sensible and rational approach to the new environment that is happening. They want to make it comprehensive, they want to make it very effective and they say that they want to engage, educate, empower and evolve their members. The project seems to me to be very worth while. I was very impressed by what I heard at the launch on the 24th. They do say that the program needs to be accessible and that:

The program is constructed so that key messages can be delivered in varied formats ...

They are catering for a wide range of people, whether they are young adults, adults, pre-retirees or retirees. They are catering for everyone in their program. They say:

Education Key provides pertinent information as members need it.

I would commend people to become familiar with the program. I think it is a really positive step taken by three of the major superannuation funds in Australia to meeting the challenges with choice of funds superannuation.