Australians spend more money each week on superannuation fees than they do on electricity, yet only a small portion of those with superannuation pay close, if any, attention to the decisions made on their behalf by their superannuation ‘trustees’.
Similarly, while Australian households now hold nearly $1 trillion in institutional superannuation funds few, if any, people with superannuation pay close attention to how the companies they own are behaving or how their super fund is voting at shareholder meetings on their behalf.
The superannuation industry, which receives almost $20 billion in fees each year, acknowledges the extent of ‘disengagement’ among superannuation customers. Indeed, CEO of the Financial Services Council, John Brogden has condemned government efforts to protect disengaged superannuation customers from fee gouging as ‘entrenching disengagement’.
In order to overcome this ‘disengagement’ much has been said by successive governments and the superannuation industry of the need to increase the ‘financial literacy’ of consumers.
But what if there was another strategy? What if the problem wasn’t financial literacy, but financial interest? What if superannuation companies tried to engage with their customers by asking more interesting questions about more interesting topics, such as whether executive remuneration is too high, corporate donations to political parties should be banned or whether individuals want their money invested in environmentally harmful industries.
This paper presents new evidence to support earlier work by The Australia Institute and others that suggests that a significant proportion of Australians with superannuation believe that ethical and environmental considerations should be taken into account by the trustees of their superannuation funds.
Indeed, the survey evidence presented below shows that more Australians with superannuation believe that ethics and environmental considerations are important than those who believe that maximising financial return should be the only consideration. The paper argues that the lack of engagement that people have with their superannuation companies may stem from the determination of those companies to largely ignore the ethical and environmental dimensions of fund performance in their communication with their customers.
Further, this paper argues that if the customers of superannuation funds were given more interesting information and asked more interesting questions they may ‘engage’ more actively with their superannuation fund.