12% super: Two-thirds of Australians want it and will pay for it
Tuesday, 23 March 2010 Kerry Lotzof
ALMOST two-thirds of Australians (61%) support a rise in the Superannuation Guarantee to 12% and are prepared to pay for it with a direct contribution from their wages, according to a survey released this week by the Australian Institute of Superannuation Trustees.
The Coredata consumer survey, released at AIST’s Conference of Major Superannuation Funds in Brisbane, suggests many Australians are concerned their current level of super contributions will not provide them with enough retirement income to enjoy the kind of lifestyle they would like.
AIST chief executive Fiona Reynolds said it appeared that the community was ahead of the views of most politicians on the need to lift the level of super contributions.
“It seems that both the super industry and the public understand that 9 per cent super is not going to deliver a comfortable retirement.
“We hope this message is received by the government and the Henry review, and that steps are taken to improve adequacy within our retirement incomes system,” Reynolds said.
The survey also found that 60% of respondents thought the government should be doing more to help low to middle-income earners pay for their retirement.
“AIST has long advocated for the abolition of the $450 monthly income super threshold and the inclusion of a super component in parental leave schemes,” Reynolds said.
“These are key measures that would immediately assist low and middle-income earners grow their super.”
The survey also highlighted that while the majority of respondents expected better returns from their super fund this year, many were concerned about their retirement planning with 55% either “concerned” or “very worried” about the government changing the laws around access to super.
“While we accept that after 20 years of compulsory super the current reviews are necessary and can bring about much needed reform, we urge the government to respond quickly to any recommendations so that people can plan their retirement with certainty,” Reynolds said.
Other key findings were:
Despite the global financial crisis, confidence in super remains high – with nearly 70% agreeing that super is a good way to save for retirement.
Switching remained low though there was low satisfaction with investment performance – 73.5% do not intend to move their super either to another fund or a different investment option in the next year, although only one-third of respondents (34.4%) were satisfied with the investment performance of their super fund.
Voluntary contributions could be on the rise. About one-third of respondents make additional contributions above 9%, and of these 30% intend to increase them in the next 12 months.
Engagement with super may be improving – 34% know their super balance to the nearest $1000.
The love affair with property continues. If they had spare cash, two-fifths of respondents (43.6%) would buy an investment property to help save for their retirement. About 22.4% would make additional contributions to super. Female respondents are twice as likely to put spare money into the bank than male respondents. Males are nearly three times more likely to invest in the sharemarket.
DIY advice on super: 35.8% use their own judgement rather than experts for advice on super; 20.6% turn to their super fund as the prime source; 9.1% turn to non-aligned financial advisors; 8.6% turn to aligned financial advisors.
Case study: What a difference 12% makes
Over the course of a working life, an average salary of 50,000 with 9% super contributions will lead to a superannuation total of $404,000. By comparison, 12% contributions (involving a salary sacrifice of a further 3%) would have that same person accumulate $543,000.
Note: these calculations are for illustrative purposes only, based on a career without any time out of the workforce, and not taking into account variations between super fund performance and fees.
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