Members doubtful super will do its job

09-Nov-2016

By Sarah Kendell

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The majority of superannuation fund members were not confident they could finance their retirement future using their super, according to new research from Investment Trends.

The research firm’s “2016 Member Sentiment and Communications Report”, which surveyed more than 20,000 super fund members in May and June, found just under 40 per cent of members were either ‘somewhat confident’ or ‘very confident’ they could finance their preferred retirement lifestyle from their super.

A further 25 per cent of those surveyed were ‘not sure’ about their prospects to finance their retirement, while 20 per cent said they were ‘a bit nervous’ and 15 per cent were ‘not at all confident’ they could fund retirement using their super balance.

Investment Trends senior analyst King Loong Choi said recent political discussions around changes to super tax concessions might have contributed to rising insecurity among members when it came to using super as a retirement savings vehicle.

“The current uncertainty on super regulation is certainly not helping allay members’ growing angst about their retirement future,” Choi said.

Members’ expected long-term returns from their super savings had also declined to 8.8 per cent a year, compared to 9.2 per cent in last year’s report.

Despite growing pessimism about the outcomes their super fund could achieve, however, the number of members switching funds had declined from 11 per cent in 2015 to 7 per cent in 2016, which was the lowest recorded rate of switching in the past seven years.

“The key triggers for switching funds have always been either changing jobs for younger members or retiring for older members,” Choi said.

“The current trend suggests members are now increasingly likely to stick to their fund throughout life-stage events.”

However, member intentions to switch remained at similar levels to 2015, with 5 per cent of respondents saying they were considering switching funds.

High fees were the primary reason to consider such a move, with over one-third of members saying that was their key consideration when planning to switch funds.

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