State Super has now completed two Member Advisory Forums and the feedback to date from members has been extremely positive.
CEO John Livanas said about the Forums, “This is a tremendous opportunity to hear directly from public sector employees. Bringing our members together with their peers, for an animated discussion about superannuation related issues. As each person shared, others contributed their thoughts, or asked questions. Members were also able to ask me their own questions directly during the Q&A. We’ve learned a great deal and will continue to bring members together in 2021 before consolidating and sharing the results.”
Nada Siratkov, General Manager, Member Engagement added, “We’ve realised that this Forum is more than a vehicle for seeking member views. It’s an event that brings like-minded people together; workers from the same industry who had never met before, who were able to enjoy a robust conversation and express their own opinions. It is a success for our members and for State Super.”
Both Forums were virtual events and demonstrated State Super’s commitment to connect with members. The event provides members with a platform to discuss two important superannuation related topics; 1. The impact of public sector super on career and retirement and 2. Responsible investment. A summary of discussion themes from both events is outlined below.
Views on public sector super
Super wasn’t a consideration when choosing a public sector career, but for some it became a reason for staying
- For most members, super was not top of mind when they chose their occupation and entered the workforce, but there was discussion in some groups that perhaps those attracted to public service may tend to value a greater sense of security.
- Superannuation did not play a role in choosing their career path or deciding to enter the public service but once members became aware of the benefits of their scheme and began taking a deeper interest in superannuation more generally, they were incentivised to remain in the public service to benefits from the defined benefit superannuation benefits.
- Some considered moving into the private sector but remained in the public sector on a part-time basis to continue with the benefits of their SASS scheme.
Young workers must take an active interest in their super
- Members think there is still low awareness of super and finances generally amongst young workers today. They believe it would make a real difference to a young person’s future financial security if they understood the benefits of and how to approach their super.
- They believe there is value in younger people engaging early with super instead of it becoming a focus later in one’s career
- It can be challenging to engage young people in conversations about their super, but it is a worthy goal.
Defined benefit pension is a comfort in uncertain times
- Forum attendees who were eligible for a pension believe their defined benefit pension provides comfort in times of uncertainty, and they have been able to reliably plan and adjust their lifestyle accordingly.
Lump sum payment options could be considered
- While members in certain schemes value their ongoing income stream, some also believe it is important that they have the choice to receive a lump sum. Having this choice reflects that individual circumstances will vary.
- Some think there is value in restricting lump sums, but uncertainty around life expectancy makes this a bit difficult.
- Some ideas were discussed such as allowing lump sum at age 65-70 once a person has a better idea of their living situation. Or mandating that some (or all) of a lump sum be taken as an income stream, because some people will not manage their money as effectively.
Appropriate information and advice needed
- Members told us that it is vital to receive accurate information at crucial junctures, like at the start of your career as well as when transitioning into retirement.
- Five years before retirement is when some began to attend seminars and see financial advisers.
- They believe it’s important to seek objective advice that is accurate and carefully explained to inform retirement planning.
- Without this advice, there is a risk of people acting without understanding the gravity of their decisions.
Views on responsible investment
Defining responsible investment
Some members see responsible investment through the following dimensions:
- Environmental sustainability – combatting climate change, investing in renewables, and balancing the needs of future generations
- Good management - investing in companies that have good management, that genuinely care for their people and have a sense of ‘Australian-ness’ at their core.
- Investing in line with what is important to members – giving members a say in where their money is invested
- Combatting modern slavery – not investing in companies with modern slavery practices and considering a company’s entire supply chain.
Maximise returns with long-term focus on responsible investment
- Our members told us that super funds should take a more strategic approach to future-proofing our economy, such as investing in our national research and development sector and investing in Australian companies.
- While members understand and recognise the tension between investing responsibly and generating good returns, they are highly concerned about ensuring investments support the best outcomes for retirees. This is particularly the case as members get closer to retirement.
- Members say there is a need to balance returns with social, environmental, and national sustainability. They know that some of these investments are long-term and this focus should include engagement with younger fund members to help them make the best decisions for their future.
Provide easy access to information
- Members told us that as a public sector fund, State Super must lead by example and ensure transparency of its investments.
- They want to know how their money is being invested and want access to accurate, up to date information about State Super’s approach to responsible investment.
- This information must be communicated in a simple, accessible format that is easy to understand so that members can make informed decisions.
Engaging and educating members about responsible investment
- There is a need for ongoing education for members on responsible investment. Many members in the Forums were unaware of the various aspects of responsible investment and had a limited understanding of the topic. For example, some thought it was limited to environmental issues.
- There is also value in having an ongoing conversation with members about how their money is invested responsibly.
White Paper to be published
There are likely to be further Member Advisory Forums in 2021, followed by the completion of a White Paper that summarises all member discussion themes. The white paper will be published on the website.