Review of how superannuation trustees supported their members during COVID-19
During 2020, ASIC took a number of actions to check on the support provided by superannuation trustees to their members during COVID-19. This included reviewing how trustees communicated to members about issues related to COVID-19, and the provision of intra-fund advice.
ASIC found that trustees were quick to resolve any issues we raised with them about their public COVID-19 communications. This included issues concerning a significant number of website projection tools that estimated retirement balances and highlighted the impact of accessing superannuation early. We also found that intra-fund advice provided during this time was consistent with previous assessments of the quality of intra-fund advice provided by superannuation funds.
Trustee website communications
Superannuation fund websites have been an important source of information for members during the COVID-19 crisis.
Between March and July 2020, ASIC reviewed 51 websites of 50 superannuation trustees that at the time of the review were collectively responsible for approximately 94% of the $1.87 trillion in assets under management in the APRA-regulated superannuation industry.
ASIC undertook this surveillance to quickly identify and prevent consumer harm by encouraging trustees to correct poor, inaccurate or potentially misleading public communications about issues and legislative measures related to COVID-19.
The surveillance looked at how trustees presented information on the impacts of COVID-19 on superannuation, including:
- Information about the temporary early release of superannuation (ERS) scheme,
- the impact of ERS on retirement balances, through projection tools and calculators,
- insurance held through superannuation,
- temporary changes to minimum drawdown rates,
- investment performance, and
- scams and fraudulent behaviour.
Most of the websites we reviewed had a dedicated COVID-19 webpage that was prominent and easy to access from the homepage.
While most websites contained accurate information about legislative and economic changes, many lacked detail about how members’ insurance through their superannuation might be affected if they chose to access their super early, or if their employment status changed because of COVID-19. Several websites had inaccurate or incomplete information about insurance eligibility in superannuation if an ERS payment resulted in a low account balance.
We also identified projection tools on 14 websites that could have discouraged members from applying for the ERS because the tools used assumptions that exaggerated the long-term impact of withdrawal. ASIC expected trustees to ensure that these tools presented estimated impacts adjusted for inflation, adopted appropriate standards and assumptions, and clearly disclosed the assumptions and variables used in the modelling and that the figures disclosed are merely estimates.
We assessed the extent to which inaccurate or confusing information on superannuation fund websites posed potential risks for consumers. Overall, funds’ communications approach and information on the ERS, drawdown and investments did not raise concerns. However, we assessed the risk to be greater in relation to information on projection tools and insurance in superannuation. There was limited information about scams on fund websites.
In light of the unique circumstances of the COVID-19 crisis, ASIC’s priority was to ensure trustees acted promptly to improve communications to members. Therefore, we contacted 26 trustees and one third party provider about our concerns and sought prompt changes.
All of the problematic communications were removed or amended quickly. Some of the projection tools (six) were proactively changed by trustees, without direct contact by ASIC, after ASIC published COVID-19 FAQ (1E). We note that fixes to ERS projection information and tools were made well ahead of the deadline for applications for the first round of ERS.
In 2020, ASIC reviewed intra-fund advice on the ERS and on insurance.
The ERS surveillance covered 27 trustees, and included 11 trustees that indicated they intended to rely on ASIC’s temporary no-action position on intra-fund advice related to the ERS, which was issued on 14 April 2020. The surveillance found that actual instances of advice provided under the no-action position were very limited. We did not identify any evidence of trustees inappropriately using intra-fund advice to discourage members from applying for the ERS.
As part of checking the support trustees provided to members in relation to insurance issues, ASIC requested samples of insurance related intra-fund advice. Of the 18 files collected, eight were assessed as complying with the best interests’ duty and related obligations. The remaining files were assessed as non-compliant because of issues with procedures and record keeping. We did not identify any serious consumer detriment and the compliance rate was similar to the compliance rate identified in ASIC’s December 2019 Report 639 Financial advice by superannuation funds.
ASIC and APRA outlined their expectations of superannuation trustees in relation to the challenges of the COVID-19 pandemic in a joint letter released 1 April 2020. Trustees can also refer to ASIC’s COVID-19 FAQs.
ASIC also previously highlighted how trustees can provide good member communications in Report 655 Review of member communications: Protecting Your Superannuation Package (PYSP) reforms. See the section on Tips for future member communications.