Working Australians support an increase in the superannuation guarantee (SG) from 9 to 12 per cent, but a lack of understand of superannuation results in reduced levels of trust, a Mercer study has found.
One in three people with ‘beginner’ level understanding of superannuation strongly supported the rise, and just over half of those with ‘advanced’ knowledge strongly supported it, Mercer’s Superannuation Sentiment Index found.
The December survey of 1028 working Australians showed that overall three in five supported the increase, with only one in four confident their retirement savings would last up until age 80 — and only one in three thought their savings would last past age 70.
The survey also showed many Australians still lacked understanding about important aspects of super. One in five did not know the investment option their super was invested in and the same amount were unsure of the tax effectiveness of super.
Those with less understanding were also less likely to have made preparations for retirement, suggesting the industry needed to more effectively educate members, and provide income forecasts including the impact of contributions and stock movements, Dawson said.
Those with less knowledge of super were also less likely to trust their fund, with one quarter of beginners rating their fund as trustworthy and more than three quarters of those with advanced knowledge trusting their fund.
Overall sentiment towards superannuation also fell slightly in the latest report, partly due to volatile markets and changing legislation, the study found.
“The survey results paint a pretty dire picture for a lot of Australians in retirement,” said Heather Dawson, leader of the Mercer Super Trust.
“However, good superannuation providers also need to ensure their members know now how much they need to boost their savings, or have automatic safeguards built into products to ensure those less engaged with their super get closer to their idea level of retirement savings,” she said.
Retirement adequacy is not just about increasing contributions but also ensuring the right investment strategy, she added. Australia’s superannuation system needs stronger default investment options that address whole-of-life timeframes and more personalised retirement income forecasts for members, Mercer stated.
