Provided by Mercer:
20/9/10 Sentiment towards superannuation amongst working Australians has improved for the first time since the onset of the global financial crisis. Australians are still wary as concern grows around stock market volatility and the impact it will have on retirement.
Mercer’s study of attitudes towards superannuation of 1003 working Australians, conducted in June 2010, revealed sentiment towards superannuation had risen by 3 points to a rating of 40 out of 100, in line with improved share market performance in the first half of the year. The increase marked the first time sentiment had improved since the global financial crisis hit.
In June 2008, average sentiment was at 54 out of a possible 100. This is considered ‘moderate’. In December 2008 sentiment was at 42, dropping to 38 in June 2009, and 37 in December 2009.
But with a lag between share market movement and sentiment, it remains to be seen if the recent improvement can be maintained. This study also revealed, in a reflection of recent market fluctuations, that the percentage of working Australians who are fairly, very or extremely worried about the impact of share market volatility on their superannuation account balances rose from 56% in December 2009 to 61% in June 2010.
The study also found that overall the level of trust in superannuation has improved as the economy has recovered, with 49% of respondents believing their main fund is trustworthy, compared to a low of 41% in December 2009.The study explored the issue of trust and found that the areas of service and reliability contributed to the perception of trustworthiness, with 63% of respondents saying they trusted their superannuation fund to do what it says it will do.
Further analysis also revealed that those with higher levels of knowledge about superannuation looked upon their fund more favourably with 81% of people who rated themselves as having a high level of knowledge about superannuation saying they trusted their fund to have their best interests at heart; just 39% of people with a low level of knowledge felt the same.
Ms Heather Dawson, Partner at Mercer said the findings underlined the need for the superannuation industry to continue to educate and engage with members. “Confidence in superannuation took a hit with the share market volatility, but it is important to acknowledge that the issue of trust runs deeper than fund performance. Like any healthy customer relationship, lasting trust will be built upon meaningful communication and delivering quality, consistent service.”
“This research highlights the need – and appetite – for superannuation funds to improve member knowledge. This will deliver a twofold benefit – greater empowerment and better retirement outcomes for members and an opportunity to build trust and ultimately member loyalty for funds,” she said.
The study also showed that there was room for improvement in how members are informed about superannuation fees.
“Only half of the people surveyed said they were well aware of the fees and charges applied to their superannuation fund,” she said.
Key findings:
- The proportion of working Australians that have started preparing for retirement has increased from 47% in December 2009 to 52% in June 2010.
- Over half (59%) expect to be less comfortable in retirement than they are now (down slightly from 61% in December 2009).
- The top concerns about superannuation are low growth and returns, not having enough funds for retirement, loss in value and the state of the economy.
- Interaction with superannuation has remained stable since the financial crisis, nearly half (49%) did not interact with their superannuation fund in the last six months.
- In the next six months, just over one in three (37%) plan to review their investment strategy (up from 34% in December 2009).