Nod for higher super savings
Published in Herald Sun, March 2010 by Karina Barrymore
It takes more than a global financial crisis, massive investment losses, constant rule changes and a huge drop in confidence to weaken the Aussie spirit, with most people still willing to tip in extra money to their superannuation.
Almost two in three people support a rise in the super guarantee to 12 per cent and they are prepared to pay for it with direct contributions from their wages, according to a survey by the Australian Institute of Superannuation Trustees.
The survey also found that one in three people already make additional contributions to their super and, of these, about 30 per cent intend to increase this amount in the coming year.
However, most Australians also said they were unhappy with the performance of their super fund.
That was in line with the latest Mercer sentiment index this week which found record low confidence in the super system with only 41 per cent of people trusting their super fund.
If confidence and trust is so low, why are people still prepared to lock away even more of their money?
According to research company SuperRatings, for better or worse Australians realise they have no choice but to save for their own retirement.
"Australians have got to the point where they know they need their own super money in retirement," SuperRatings managing director Jeff Bresnahan said yesterday.
"The loss of confidence is entirely due to the poor returns of the past two years.
"I absolutely agree people should make extra contributions and I’m not a fan of it all coming from the employer.
"I think Paul Keating got it right when he suggested 9 per cent compulsory through the employer, 3 per cent from the worker and 3 per cent co-contribution from the government."
Mr Bresnahan said it was important that people make their own contributions and be more involved.
The National Information Centre on Retirement Investments, a free independent consumer service, also supports bigger contributions.
"Nine per cent isn't enough to fund most people's retirement to the level that they would like, and 12 per cent or more would be closer to the mark," NICRI chief executive Wendy Schilg said yesterday.
"The more people who understand the system and the basic principle of investing, the more comfortable they will be in using super as their retirement savings vehicle."
However, it was not just consumers who lacked understanding, she said.
"From feedback we have received, funds are not engaging with their members and providing enough information on issues such as the underlying assets held and their market expectations," Ms Schilg said.
"This could be a contributing factor to the low percentage of people who do not consider their fund as trustworthy."
Wealth Within founder Dale Gillham is surprised that people want to contribute more money when confidence was so low.
"It really does surprise me but I wonder when push comes to shove would they really have the spare cash to do so?
"On the issue of not trusting the system, I think that has two parts. One, is that they might not trust the fund managers and their ability to perform but the second part is that people also don't trust the government and its inability to stop playing with the rules."
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