What to do if you're in a dud super fund
The $4 trillion super sector has been a great success, delivering good returns since its inception.
Now the focus has shifted to customer service.
Over the past few years, complaints to the Australian Financial Complaints Authority (AFCA) have soared, particularly over delays in handling death and disability claims.
This has led the Australian Securities and Investment Commission to take legal action against Cbus, with more cases expected to follow.
Complaints have ranged from delays with rollovers and withdrawals; difficulty accessing online accounts or services; funds cancelling insurance; funds miscalculating fees; and mistakes in following instructions around investment switches.
Xavier O'Halloran says funds have focused on keeping fees low and are loath to spend money elsewhere.
"They like being on top of the list in terms of low cost and great returns. They don't spend money on basics such as customer service.
"The first time you notice you've got bad service is when something has gone horribly wrong, like when the death benefit payment is delayed by 12 months. That's when you find out your fund's customer service isn't up to scratch.
"It's a market failure, in my eyes, if they're not inclined to engage with customers on a daily basis. We can't see the funds fixing it on their own."
He says the funds are not always good at identifying that someone has a complaint unless they use specific words like 'I'd like to complain'.
"Let them know how they've failed you and what you want them to do to fix the problem. That kind of clarity should help escalate the complaint internally before you need to go to AFCA to get it resolved."
If you're unhappy with your fund's long-term performance, it might be time to choose a better performer. First check with your employer that you have choice of fund - a small minority of employees aren't eligible.
O'Halloran says switching is much easier now than in the past.
"You can tell the fund you would like to set up an account, they can process it for you and contact your other fund to transfer the balance.
Or if you're already in a fund you want to be in, but you've got multiple accounts, you can make this transfer via the ATO on the myGov platform. You can select the fund you want the rest of your super to be consolidated into."
Before you switch funds, it's vital to check what you are giving up in the way of existing insurance and how the new fund stacks up.
If it's not up to scratch, or it declines to insure you, keep your old fund going with a small balance for its insurance and keep topping it up.
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