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Keating's super versus disengaged millennials

Can the superannuation system designed a generation ago still be fit for purpose for the modern workplace and our ageing population? This was the question put to 80 business executives across a wide range of industries in Mercer’s recent survey and report: Keating’s super meets the digital natives/the next generation of super.

Changes in the modern workplace

Nine of the ten organisations surveyed agree that as the workplace transforms, so too must super. Mercer’s CEO, Ben Walsh said:

“The results indicate a seismic shift from the workplace of 1992, when full-time jobs were predominantly filled by men with few job changes. Contrast that with Generation Z, digital natives who will not only have multiple jobs, but multiple careers.”

Demographer, Bernard Salt, added:

"The nature of work has changed, as has the gender mix, the ethnic mix and the technology skills of the workforce. And yet, throughout these profound changes, the essence of superannuation has not changed substantially. Superannuation of the future needs to be portable both within Australian workplaces and even globally. It needs to be ‘pauseable’ so that women, and men, can come into and out of the workforce as they deem appropriate to their life choices. The next generation of super needs to reflect the agility, the diversity, the globalness, the lifestyle choices of Australians today, that indeed the workplace now recognises.”

The changes in the future labour force predicted by the 80 business leaders include 54% forecasting an increase in contractors at the expense of permanent staff and a sharp spike in part-time workers, both men and women.

Lack of engagement

The Mercer Report also highlights the differences in superannuation engagement by age. About 89% of employers think employees aged 60 years and over regard super as very important, compared with only with 8% of employees under 30 years. In fact, 56% reported that they didn't think super was important and only 23% said it was somewhat important. The Report provides many quotations from young people showing a complete lack of interest in super.

The following is predominantly extracted from Mercer’s report.

Despite super now having served a generation of workers, there is broad agreement that the system has failed to engage employees. According to those surveyed, employees don’t view super contributions as 'their money', with many unable to identify their fund or what it invests in. Not surprisingly, they fail to undertake any forward planning or consider super as part of their broader investment approach to retirement.

This trend will worsen in time, with younger workers in particular found to have little interest or engagement with the super system. Engagement only appears to occur closer to retirement, when it can be too late to optimise super savings. Competing financial priorities, a sense of a lack of empowerment in dealing with finances and financial institutions and difficulty in navigating a 'complex' system are among the main reasons cited for people’s disengagement with super.

Failure is an opportunity in disguise

While failure to engage super fund members is acknowledged as a major issue, it is an opportunity for vast improvement.

Survey participants think super is an underutilised lever when it comes to staff recruitment and retention, with the majority of employers not recognising its value when negotiating staff contracts, such as offering higher contributions or paying administration fees. Integrating super into staff entitlements can also serve to better educate and empower staff to actively manage their financial assets.

Communications to members are also viewed as opportunities to better engage members, particularly young workers, with current interactions criticised for being text heavy and lacking dynamism. While other industries had successfully used video, social media and humour to interact with their target audiences, the super industry is lagging.

While the bulk of members’ interactions with super funds shifts to online platforms, technology can further enhance member experiences through more widespread adoption of AI to anticipate and meet member needs, such as matching callers to customer service staff by age. AI is also seen as a way to trigger discussion about investment needs based on members’ life stages.

Linking super accounts to online bank accounts was considered another opportunity to keep super front of mind and incentivise saving and contribution targets. However, more traditional forms of communication still have their place. One suggested solution included employee workshops to demystify super and encourage members to be more active participants in their future saving strategy. Financial literacy should start earlier than the workplace, with widespread agreement that the government should update school curriculums to include 'financial health' alongside health and fitness, and sex education.

Distrust and disruption

The recent scrutiny of the financial services sector could further embed a sense of skepticism and detachment among fund members already feeling overwhelmed by a multi-faceted and regulated system. Current industry practices are partly responsible for contributing to wide-scale disengagement and apathy towards super.

The future workforce profile will not be a big enough impetus to trigger change in the system on its own. They also doubt recent 'disruptors' targeting millennial members through social channels and simpler product options can reshape an essentially government-controlled system, and that it would likely take the big-name funds to have large-scale impact to force significant change.

Businesses see a growing need for a new superannuation system to cater for the next generation. Superannuation providers, in turn, should view this as an opportunity to break away from an outdated system and lead the change.

Go to to learn more.


Leisa Bell is Assistant Editor at Cuffelinks.


Rob and Krys
November 01, 2018

We are 69 year old self funded retirees with a SMSF and are in the over $837,000 bracket - no work and no pension.

We used to think that when handling our money in our SMSF that we were investors.

If the proposed Labor changes come in to legislation we will be referring to ourselves as "victims".

We find it interesting that for the Mercer research 80 business executives were interviewed but no "victims".

A good majority of the business executives interviewed were probably in the 40-50 age bracket and have not had to endure all the changes effecting their plans and are probably at least 1 generation and possibly 2 behind many of the "victims".

Maybe it would have been a good idea to get some thoughts from the "victims" as after all they were around when Superannuation was introduced and have had to put up with all the tinckering since.

Some of the "victims" were also probably very successful businessmen and women and could make a great mentor group - an excellent source of advice based on past experience.

November 02, 2018

Engagement will always be difficult when those faced with a lessening of their overly generous, and largely unaffordable, investment (super, capital gains, negative gearing) taxation benefits start referring to themselves as "victims". The antics of those managing our money highlighted in the Royal Commission haven't helped much either.

Rob and Krys
November 02, 2018

Graeme - Leisa Bell's article was about superannuation - capital gains and negative gearing were never mentioned by Leisa or by us.

When super was introduced we thought it was about long term planning for the future and about setting up so as not to end up on the pension and be a burden to those coming after us.

Did the original architects of the system believe the system would be "overly generous and largely unaffordable?" - that does not sound like Labor Party dialogue to us.

It is disappointing to see those who saved their money and planned for their retirement disadvantaged whilst those who spent their money on expensive holidays etc with no thought what so ever for the future and treated a pension as a "right", about to get tax advantages from Labor's proposed changes.

Many people established life time financial plans based on the information available at the time regarding superannuation and were not aware that superannuation would be used in the future to plug budget deficit black holes.

Labor have already indicated a back dating of their franking credits policy to March 2017 - what next?

Interesting that Labor have also indicated the franking credits changes will not apply to Industry Funds (read Union Funds).

As a result of the proposed changes many SMSFs will probably be shut down - this is what Labor want - more people moving to their Union controlled Industry Funds.

Geoff F
November 06, 2018

Instead of "bagging" Rob and Krys, who invested under whatever superannuation rules were put in place by both major parties, have you considered what their concern, and the concerns of many others who invested under the same rules, is/are?
They are referring to a proposed Labor policy of not refunding franking credits, which will introduce discrimination between different types of superannuation funds, being SMSFs, industry and retail funds. It is poor policy. And don't believe those people who say the policy will be returning the rules to what they were initially - they don't. There are exceptions all over the place - the Future Fund, charities, some groups of people on the government age-pension. Good policy doesn't need to have exemptions.

Further, in addition to being applicable to superannuation funds, but not equally, it will impact people at the lower end of taxable (outside super) incomes who receive franked dividends, those on under, yes UNDER $37K, being where their marginal tax rate is less than the company tax rate. So much for a progressive taxation system!

So, perhaps you could focus on the inequities of the flawed policy itself, as that would be more constructive.

SMSF Retiree and Unhappy
November 06, 2018

While considering Bill Shorten’s proposed franking credit grab, I have also been reading Nassim Nicholas Taleb’s recent book “Skin in the game, Hidden asymmetries in Daily Life". It is a hard but thought provoking read.

Chapter 18, “How to be Rational about Rationality” has an interesting and relevant definition: That which is rational is that which allows for survival. Anything that hinders one’s survival at an individual, collective, tribal or general level is, .. , irrational.

As an SMSF retiree, I see Shorten’s proposal to confiscate 25% of my annual Superannuation income as quite irrational – this reduced income directly affects my survival and the survival of my family.

On the other hand, I imagine Bill Shorten, as the beneficiary of this confiscation activity, sees the act as quite rational. It provides coin to help keep him in a job - to utilize for his (indirect) benefit, for the benefit of his family and for his “tribal” members (voters).

As runners in the marathon run of life, those of us who are SMSF retirees are having income confiscated AND we are also hit by timing. I am past the point where I have the option of additional employment, working for longer or career change to regenerate that lost 25% of my income.

Bill is proposing to steal our running shoes 75% of the way through running our life marathon while expecting us to still finish the race with the soles of our feet intact.

Those of us who want to finish running the marathon according to our own plan must protest loudly.

November 01, 2018

If there's lack of engagement, it's not from lack of trying from the super funds themselves. As I work for one, I can tell you it's a very hot topic of conversation internally, but there's an element of leading the horse to water here - assuming you can get the horse's attention in the first place, that is. We've tried and continue to try very hard.... "Look, over here!!!! Important stuff!!!" Industry / retail - doesn't matter - everyone will tell you the same thing.

Trying to make them - millennials or anyone else - interested in their super is very difficult and the legislated complexity of superannuation and the constant changing of the rules ain't helping much.

People tend to have a "moment" sometime about 50 when they all of a sudden get very interested indeed but for some it can be all too late.

With all the effort all the funds put into the question of "engagement", if a particular fund had cracked that nut, we'd know about it. No-one has.

November 02, 2018

Spot on Geoff. Any adviser will tell you that very few people under the age of 50 or so have any interest whatsoever in their superannuation, apart from it apparently magically containing just the right amount of insurance for them when you ask them about that during the interview.

The lack of interest in this or pretty much any other aspect of people's own finances is the bane of anyone who wants Australia to have a financially literate and aware population.

November 01, 2018

The super system may still be far from perfect, but it has actually evolved quite a lot since Keating's day. Unfortunately very few people have kept up with this evolution, and most of the commentary on it is significantly out of date.

Sometimes this is done deliberately for commercial advantage, such as union fund and SMSF marketing which compares their products to early generation retail funds from the 80s and 90s rather than modern day products.

But sometimes it's from so called experts who just haven't kept up. Really Bernard Salt? Super needs to be portable and pausable within Australian workplaces!!?? Perhaps our "profoundly changing society" would be better off with mobile phones and colour TV too?

November 01, 2018

What does Bernard Salt mean when he says super should be "pauseable"? Isn't it already?

November 01, 2018

1) The continuous meddling by various governments engenders a distrust in the system, particularly with those that are most exposed to govt meddling over time (i.e. the younger participants)... don't forget it was only just over a decade ago that there was a mad rush to put $1m into super, now look at the situation!

2) There needs to be better education within the schooling system .... I can guarantee that the vast majority of the population will benefit materially more from a greater understanding of compound interest & opportunity cost than they will from say calculus over their lifetimes but it is rarely taught in schools to the very people that by definition will benefit the most from those two principles !!!


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