The biggest challenge facing the superannuation system is the distrust millennials have in the financial services industry at large following years of scrutiny.
New research from Vanguard comparing the retirement savings systems of Australia, the UK, US and New Zealand shows that Australian investors have the highest levels of distrust in the system, with 41% highlighting this as the reason they don't seek financial advice from an adviser or financial institution, nor sacrifice additional contributions.
Speaking at the 2017 SMSF Association National Conference, Deloitte Digital chief executive Peter Williams said this is partly a result of superannuation funds not putting enough technology into the hands of members to afford them a greater understanding of their retirement savings.
"Technology and trust can go hand in hand. You can actually scale trust through technology and it can be used to collect valuable data that will provide a more holistic view of how people make their financial decisions, and using that data for members' best interests is the winning formula," Williams said.
Williams believes if super funds invested more heavily in technology to engage millennial members and provide financial literacy while offering a real-time view of their super balances, trust will grow. SMSF Association chief executive Andrea Slattery agreed.
"I believe we owe an obligation to the young people of Australia to ensure they understand where that 9.5% of their hard-earned salary is actually going. We have an obligation to remove the myths around super, speak the facts and not embellish them for our own interests, and greater transparency will help us in this," Slattery said.
Slattery also believes that the new statutory body being introduced as part of the recently passed professional standards legislation will engender trust.
Though these factors were challenged by a delegate who questioned why the APRA-regulated super system should be trusted when it's generally accepted that it is the APRA-regulated banking system that created the distrust.
"I think there's a lot of work that banks and the retail sector need to do to restore trust and the same goes for other segments of the industry. It really comes back to honing in on what's in the best interests of the member, not the institution itself," APRA deputy chairman Helen Rowell said.
"We see a lot of self-interest, conflict and poor decision making in all parts of the industry, so our focus is on identifying those areas of underperformance, where are the conflicts that aren't being managed and addressed. They are happening across the APRA-regulated space and our goal is to try and eradicate those and lift that minimum standard."