Home / Superannuation / Super fund satisfaction levels drop as market volatility bites

Australians across the board are less satisfied with their superannuation funds than they were a year ago, a new report from Roy Morgan showed, with sharemarket volatility and industry consolidation acting as major drivers of the decline.

Australians’ satisfaction with their superannuation funds dropped in the six months through February from a record high notched in January 2022 and is at its lowest level since December 2020, according to a new report that showed self-managed and public sector funds remain the best-scoring super categories.

In its Superannuation Satisfaction Report, released March 21, research firm Roy Morgan found a 66.6 per cent satisfaction rating, down 5.4 per cent from the 72 per cent level recorded slightly over a year ago. However, the level is still above the long-term average of 57.9 per cent and higher than any period before the pandemic years of 2021 and 2022, which saw satisfaction levels increase.

“The drop in customer satisfaction from a year ago has occurred as the ASX200 experienced a period of volatility since mid-2021,” Roy Morgan CEO Michele Levine explained, noting that the ASX200 fell almost 1,200 points between its August 2021 high and June 2022 (see chart).

“Looking forward, the market faces a challenging environment, with inflation at a 32-year high of 7.8 per cent in the year to December 2022 while the [Reserve Bank of Australia] has increased official interest rates by 3.5 percentage points in under a year to 3.6 per cent – the highest for over a decade since mid-2012,” she said.

“As well as high inflation and interest rates, there is also emerging instability within the US and European financial industries in recent weeks” in the wake of banking sector upheaval following the failures of several US banks and of Credit Suisse.

According to the report, UniSuper and HESTA had the highest customer satisfaction ratings among industry super funds, followed by AustralianSuper, HostPlus and Australian Retirement Trust. Macquarie was the highest-rated retail fund, having increased its satisfaction rating by 3.9 percentage points despite the broader downtrend, followed by MLC, OnePath and Colonial First State.

But those funds’ outperformance comes in the context of an across-the board decline, with all superannuation categories recording drops in satisfaction from January 2022 (see chart).

“Retail funds are down 5.6 percentage points to 61.6 per cent and are the lowest-rated category, while industry funds dropped 6.3 percentage points to 67.9 per cent – the largest drop of any of the four types of super,” Levine said.

“Although both have experienced a drop in satisfaction compared to early last year, self-managed funds on 74.7 per cent (down 5.3 percentage points) and public sector funds on 73.4 per cent (down 5.7 percentage points) remain the two sectors with clearly the highest satisfaction – well above the overall average.”

The report also pointed to the trend of consolidation in superannuation, noting that a key takeaway from recent mergers is “the importance of communication and a smooth transition process throughout”.

“As the industry continues to consolidate in the years ahead, we are set to see more such mergers and acquisitions as the larger players look to increase the amount of assets they have under management in an increasingly competitive industry,” Levine said. “The premium on maintaining a high degree of customer satisfaction and providing better investment returns will only increase.”