Member perceptions of ESG investing through superannuation

Purpose Environmental, social and governance (ESG) risks have the potential to negatively impact financial returns, yet few superannuation funds integrate these considerations into their investment selection. The Cooper Review (2010) identified a lack of member demand as a key impediment to ESG investing by superannuation funds. Given this problem, the aim of this study is to explore superannuation fund members’ perceptions of ESG investing by their funds in order to identify reasons for the lack of demand. Design/methodology/approach An on-line survey was developed and distributed to assess possible reasons why members do not select ESG investment options. In total, 549 Australian superannuation fund members responded to the survey. Findings Results indicate that the majority of superannuation fund members are interested in ESG investing. Members lack awareness of their fund’s approach to ESG investing, and they do not perceive there to be a financial penalty from ESG investing. Finally, members show a preference for consideration of governance issues over both social and environmental issues. Research limitations Respondents are well educated and the majority did not choose their superannuation fund. There was no measure of financial literacy included in the research instrument. There is also a general limitation in surveying superannuation fund members when they lack knowledge about superannuation. Practical implications The results indicate that superannuation members are interested in both superannuation and ESG investing. Given the low take-up of ESG investment options, this finding raises the question of how effectively funds are engaging their members. Social implications The results should be of interest to superannuation funds and may lead to renewed interest in promoting ESG products. Originality/value This is the first study to examine superannuation members’ attitudes and behaviours towards ESG investing in the context of superannuation. The study also adds to our understanding of member decision making in the $1.8 trillion superannuation industry.

Measuring financial literacy of superannuation fund members: Preliminary results

Superannuation is typically the second most valuable asset for most working Australians. Despite such importance, many fund members appear to be disengaged with their ‘forced savings’. The literature shows that financial literacy is one of the key requirements for making informed financial choice. Yet numerous financial literacy studies indicate that financial illiteracy is widespread across different countries and settings. This study assesses the financial literacy of superannuation participants through a survey of 594 fund members. The results show that while most respondents displayed high levels of self-rated and general financial literacy, fewer scored as well in relation to more advanced literacy regarding superannuation investment options.

Engagement with superannuation: Is there really a gender gap?

A recent report produced by Suncorp Bank and The association of Superannuation Funds of Australia (ASFA) found women were less engaged with their superannuation than men (2012). Given that women have lower superannuation balances than men, a lack of engagement could leader to a further reduction in their ability to provide for themselves in retirement (Basu and Drew, 2009). Using a variety of measures of engagement, we find women are mostly as engaged as men. The main determinants of engagement continue to be financial literacy, age and value of superannuation.

A review of the case of the civil servants of the Crown : with reference to the question of their superannuation and salaries /

Mode of access: Internet.

Returns from investing in Australian equity superannuation funds, 1991-1999

In this analysis of investment manager performance, two questions are addressed. First, do managers that actively trade stocks create value for investors? Second, can the multifactor model of Gruber capture the cross-section of average fund returns for the Australian setting? The answers from this study are as follows: as an industry, investment managers destroyed value for superannuation investors for the period 1991 through 1999, under-performing passive portfolio returns by 2.80-4.00 per cent per annum on a risk-unadjusted basis and 0.50-0.93 per cent per annum on a risk-adjusted basis. Evidence is provided in support of the four-factor model of Gruber; however, the model fails to capture the impact of investment style for the Australian setting. The findings suggest that Australian superannuation investors would transform their retirement savings into retirement income more efficiently through the use of passive alternatives to the stock selection problem.

The true cost and performance of individual residential property investment and the implication on real estate agency practice

Investment in residential property in Australia is not dominated by the major investment institutions in to the same degree as the commercial, industrial and retail property markets. As at December 2001, the Property Council of Australia Investment Performance Index contained residential property with a total value of $235 million, which represents only 0.3% of the total PCA Performance Index value. The majority of investment in the Australian residential property market is by small investment companies and individual investors. The limited exposure of residential property in the institutional investment portfolios has also limited the research that has been undertaken in relation to residential property performance. However the importance of individual investment in residential property is continuing to gain importance as both individuals are now taking control of their own superannuation portfolios and the various State Governments of Australia are decreasing their involvement in the construction of public housing by subsidizing low-income families into the private residential property market. This paper will: • Provide a comparison of the cost to initially purchase residential property in the various capital city residential property markets in Australia, and • Analyse the true cost and investment performance of residential property in the main residential property markets in Australia based on a standard investment portfolio in each of the State capital cities and relate these results to real estate marketing and agency practice.

Are the financial services external complaints resolution schemes subject to judicial review?

In Australia seven schemes (apart from the Superannuation Complaints Tribunal) provide alternative dispute resolution services for complaints brought by consumers against financial services industry members. Recently the Supreme Court of New South Wales held that the decisions of one scheme were amenable to judicial review at the suit of a financial services provider member and the Supreme Court of Victoria has since taken a similar approach. This article examines the juristic basis for such a challenge and contends that judicial review is not available, either at common law or under statutory provisions. This is particularly the case since Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd (2006) 157 FCR 229; 60 ACSR 372 decided that the jurisdiction of a scheme is derived from a contract made with its members. The article goes on to contend that the schemes are required to give procedural fairness and that equitable remedies are available if that duty is breached.

Preliminary review of over-regulation in Australian financial services

This article examines a preliminary review and the limited evidence of over-regulation in Australian financial services. The 1997 Wallis Report and the CLERP 6 paper resulted in the amendments to Ch 7 of the Corporations Act 2001 (Cth) by the Financial Services Reform Act. Nearly a decade later the system based upon 'one-size fits all' dual track regime and a consistent licensing regime has greatly increased the costs of compliance. In the area of enforcement there has not been a dramatic change to the effective techniques applied by ASIC over other agencies such as APRA. In particular there are clear economic arguments, as well as international experiences which state that a single financial services regulator is more effective than the multi-layered approach adopted in Australia. Finally, in the superannuation area of financial services, which is worth A$800 billion there is unnecessary dual licensing and duplicated regulation with little evidence of any consumer-member benefit but at a much greater cost

Rethinking financial literacy in the aftermath of the Global Financial Crisis

Systemic risks and other factors that contributed to the global financial crisis have highlighted the need to reconsider the scope and nature of financial literacy initiatives and programs. In this article, we argue the case for rethinking financial literacy and the need for integrated solutions that explicitly incorporate solutions to behavioural shortcomings exhibited by individuals in their financial decision-making. While recognising the need to consider behavioural biases in individuals’ financial decisions, to date regulatory responses have largely ignored those biases in their proposed education and other strategies designed to address poor financial literacy and improve financial disclosure that, in turn, will improve financial decision-making.