ING Direct’s Your Super Future report also found that about 50 per cent of Australians do not believe their super fund will provide them with enough income for retirement. In addition, 35 per cent said they are likely to switch funds to get a better deal on fees.
Vaughn Richtor, ING Direct chief executive, said the report shows a need for super funds to be more transparent.
“As an industry, we need to ensure that super funds are as simple and transparent as possible so that people can see how much they are likely to have accumulated by retirement and plan accordingly,” he said.
The report also found that almost half of Australian workers believe that just $500,000 or less will be enough to fund a comfortable retirement. Meanwhile, two in five Australians do not know the balance of their main super fund and 49 per cent are unaware how much they are paying in fees.
ING Direct’s executive director of customer delivery, Lisa Claes, said the findings indicate that Australians’ current knowledge of retirement-related financial issues is still grey in some areas.
“Australians are becoming more financially savvy, but despite thinking we know it all about retirement, we’ve still got our heads in the sand on some points,” she said.
“Too many of us underestimate how much we’ll need to live the life we want. For example, housing affordability issues mean today’s young people could face a future of managing mortgage repayments well into their later years.”
However, when it comes to supporting an increase in superannuation contributions to 12 per cent, a majority of Australians said they are in favour.
Sally Loane, chief executive of the Financial Services Council, believes the current 9.5 per cent rate is “simply too low to enable Australians to self-fund their retirement”.
“With average balances still low – at $70,000 for women and $110,000 for men – there is scope to build more flexibility into the superannuation system to reduce the great gender divide,” she said.
“Australians recognise that periods of reduced or no workforce participation due to child or elder caring responsibilities play a key role in the gender gap, and they support more flexibility in the super system to help those who have taken ‘career breaks’ to build their retirement savings when they can.
“There is a good case for increasing superannuation contributions to 12 per cent, with our survey finding that a significant portion of Australians – more than 80 per cent – support the increase as a priority,” Ms Loane said.
The online survey that provided data for the Your Super Future report was conducted between 6 and 11 August and canvassed more than 1,200 workers across Australia aged 18 and over.
There are two important points that need to be made about this report.
Any suggestion that we can improve financial literacy is doomed by the fact that studies of adult general literacy and numeracy levels in Australia are so poor that nearly half of Australian adults have literacy and numeracy scores are below the minimum level needed to function fully in life and work.(ABS 2006 Adult literacy and life skills Survey).
My experience in superannuation is that the majority of members simply do not even open their annual statement, and if they do they cannot comprehend the information on the statement.
The SGC has been a major development for retirement planning but it is really still in the start-up stage for the vast majority of the workforce.
I commenced contributing to superannuation at age 23 and I was required to contribute 5% of my after tax wages which were matched by my employer. Only in the 1990s could I look for salary sacrifice of before tax income.
My suggestion is that if people think we need a 12 or 15% contribution level to superannuation we reintroduce the idea that people also have a responsibility to make a contribution towards their own retirement.
Perhaps one of the options to increase the retirement of females is to provide for an increased concessional contribution level for all female workers over the age of 50 years. This would allow them to increase their salary sacrifice levels to help build up their balances.
In the final analysis we must get across to the workforce that each person has a stake in their retirement and the standards they will live by.