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Member education succeeds
Financial education is narrowing the gap between Australians’ retirement expectations and what their current superannuation arrangements will provide, according to data presented to last month’s Conference of Major Superannuation Funds (CMSF) on the Gold Coast.
Large universities-based fund Unisuper released the results of research conducted by the fund and Deakin University, which suggested that superannuation fund members gained real value from education seminars when it came to getting their retirement income arrangements right.
The Unisuper/Deakin University research was similar in nature to that undertaken by the large US-based pension fund TIAA-CREF.
What the research found was that only one in five respondents were confident they would reach their retirement income goals prior to attending a financial education seminar, but this figure doubled after respondents attended a seminar.
It found that 26 per cent of attendees changed their planned retirement age after the seminars, while more than half altered their income goal.
Interestingly, for those who changed their income goal, most lowered the figure, suggesting an initial overestimation of their likely income needs in retirement and their capacity to achieve their goals through their current savings arrangements.
Outlining the research findings at CMSF, Unisuper chief executive Ann Byrne said the research showed people had left the seminar with a greater understanding of their retirement needs and the strategies they would need to adopt to achieve them.
“We can say with confidence that the financial education seminars inspired significant change in our members’ perceptions and understanding in all key areas,” she said.
In its broad interpretation of the outcome of the research, Unisuper said that, in the spectrum of financial education services offered by superannuation funds, it was considered that workplace seminars occupied a special place because they often represented the main point of interaction between members and their fund with respect to critical decision making points.
Unisuper acknowledged that running financial education seminars was expensive and if they were to be justified they needed to be effective.
The methodology utilised by Unisuper involved surveying those attending the seminars when they first entered the room, with participants being asked to outline their age and income goals, and then surveying them again afterwards.
That exercise delivered an interesting result, with the average age retirement goal emerging as being just over 60 and the average retirement income goal being 68 per cent of pre-retirement income.
Equally interesting was the fact that many of the people stating their age and income goals had no idea whether they might actually achieve them, while others were simply resigned to falling short.
After the seminar the average retirement and income goals stated by participants moved towards what were regarded as more realistic levels, with the average age goal moving up marginally and the average income goal declining from 68 per cent to 66 per cent of the final income year.
Where so-called confidence and commitment levels were concerned, the post-seminar results indicated greater levels of confidence on the part of respondents that they would meet their retirement goals, with many indicating they intended to start making voluntary superannuation contributions.
A third survey conducted three months after the seminar revealed respondents had stayed on track with respect to the more realistic retirement age and income goals and the means by which they could be achieved.
AUTHOR
Mike Taylor
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