Provided by Mercer: 18/2/09
Superannuation in Australia is at a cross-road after an unprecedented period of sharemarket volatility.
Many superannuation members are now unsure about the future of their super and want more information, according to a study by consulting, outsourcing and investments firm Mercer.
Mercer’s Superannuation Sentiment Index Study found the number of working Australians very or extremely worried about the impact of share market volatility on their superannuation rose from 11 per cent to 21 per cent in the last six months of 2008 while the number of people rating superannuation as a poor or fair way to save for retirement doubled from 17 per cent to 34 per cent in the same period.
Download Mercer's 2009 Superannuation Sentiment Index Study
Demand for knowledge also soared. While only 16 per cent of those surveyed rated their current knowledge of super as strong or sophisticated, 54 per cent want to achieve such a level of knowledge.
Mercer’s outsourcing business leader for Asia Pacific, David Anderson said the good news is that many Australians - some for the first time - want to know more about their super. However, their interest is likely to be driven by concern - 58 per cent of working Australians expect to be less comfortable in retirement than they are now.
“We need an education revolution in superannuation. Australians continue to see superannuation as important in saving for retirement, but their faith in the system may be dwindling. It’s time for all super funds – from the smallest through to the large
multi-employer industry funds – to step up to the mark with a specific ‘call to action’ for individual members through more personal information, education, and professional advice,” Mr Anderson said.
Mercer’s Superannuation Sentiment Index, a survey of 1,000 working Australians, was first conducted in June 2008. It found 72 per cent of people expected the balance on their next superannuation benefit statement to be higher, despite sharemarket declines that had already occurred. In December 2008, after most members had received their statements, Mercer repeated the survey.
“Many working Australians were surprised by their recent benefit statement – nearly half found their balance was lower than expected. Their expectations are now subdued – only 35 per cent expect their next statement to show a higher balance,” said Mr Anderson.
Sharemarket declines have had a sobering affect on members and although the number of working Australians that rate superannuation as a positive way to save for retirement fell by 16 per cent, superannuation remains the most important – by far - anticipated contributor to retirement income.
Key findings of the Mercer Superannuation Sentiment Index Study include:
- When looking for advice about their super, most people expected to contact their super fund (53%) or financial adviser (49%). Accountants (30%), the internet (22%) and employers (22%) were also preferred sources of advice.
- While 58% expect their lifestyle in retirement to be less comfortable than it is now, only 15% of those who had sought advice expect to be a lot less comfortable in retirement, compared to 26% of those who had not sought advice.
- Australians are choosing to move into more conservative investment options – in the last six months to December 2008, 68% of investment switches were to more conservative options (compared to 44% in the previous six months).
- The more advanced a person’s confidence in their knowledge about super, the more likely their benefit statements were in line with expectation – 44% of those with an advanced knowledge of super thought their super was in line with expectations compared to 27% with a beginner’s knowledge and 34% overall.
“Australians trust that superannuation is absolutely essential in creating a comfortable retirement, but now it’s up to the superannuation industry to evolve superannuation into a universally embraced community product that Australians are engaged with and confident about,” said Mr Anderson.
“Through personal information, education and advice, we can provide individual Australians with their own ‘call to action’ and a renewed confidence in superannuation and its key role in their present and futures,” he said.
More information
Download Mercer's 2009 Superannuation Sentiment Index Study
mercerwealthsolutions.com.au/supersentiment
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
