Provided by Mercer: 11/11/09
Superannuation remains the cornerstone of Australians’ retirement savings – but Australians’ trust in superannuation continues to fall.
Mercer’s Superannuation Sentiment Index revealed only 44 per cent rated trustworthiness of their fund as very good or excellent, this was even lower among younger working Australians at 37 percent. Yet, superannuation remains the most important contributor to retirement incomes at 45 per cent of total income.
Download Mercer's October 2009 Superannuation Sentiment Index snapshot report
Mr David Anderson, Business Leader of Mercer’s outsourcing business for Asia Pacific said, “Superannuation will always be a relatively low-engagement product earlier in life – but, the findings of our research are a clear call to action for the superannuation industry.
“Super funds need to innovate with new products, whole-of-life investment options, and encourage younger members into high growth investment strategies early.
“Inertia towards super is a reality for many Australians – let’s accept the reality and think outside the square to steer Australians on the right path to a comfortable retirement,” said Mr Anderson.
The Index is based on an online survey of 1,025 full time working Australians aged 25-65 years and was conducted in July 2009. The research has been conducted every six months since June 2008. The latest research is designed to gauge Australians’ changing attitudes towards superannuation and retirement in an environment of intense scrutiny on superannuation funds.
Mercer’s Superannuation Index also tracks the All Ordinaries Index against the general sentiment towards superannuation to better gauge how Australians’ confidence in superannuation is linked to the general movement in share markets.
Twelve months ago overall sentiment scored 54 out of 100, considered a moderate rating, it has now fallen below moderate to 38 in June 2009, considered only fair. Results show a lag between share market movement and sentiment. With share markets slowly recovering from the lows of the last 12 months, it is possible a rebound in sentiment towards superannuation is imminent. However, this will depend heavily on the role of government, industry and superannuation funds in rebuilding trust.
Other key findings:
- The number of working Australians rating superannuation as either a poor or fair way to save for retirement doubled from 17% to 35% in the 12 months to July 2009
- The number of working Australians who saw superannuation as a good, very good or excellent way to save for retirement fell from 80% to 62%
- Nearly 1 in 5 working Australians were unsure of the tax effectiveness of super
- Nearly 1 in 4 didn’t know what investment option their super was in
- 74% of working Australians aged over 50 expect they will not be financially comfortable in retirement.
Mr Anderson said, “Australians have to draw on their super until the day they die – not the day they retire – yet Australians ability to prepare for retirement is diminishing despite increased awareness as a result of the global financial crisis and an ageing population.”
“More than 2 in 3 working Australians over 50 will struggle financially in retirement according to these research findings, but this could potentially be avoided with better preparation,” he said.
More information
Download Mercer's October 2009 Superannuation Sentiment Index snapshot report
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.
