Currently, under the superannuation guarantee system, employers are required by law to put 9% of an employee’s wages into a complying superannuation fund.
The Financial reports that Mercer’s survey found only one in four Australians are confident their retirement savings will last until age 80, the average life expectancy. Only one in three are confident it will last beyond age 70. Fifty five per cent anticipate being less comfortable in retirement than they are now and the longer they expect to live, the less prepared individuals feel about retirement.
According to the news report, Heather Dawson, leader of the Mercer Super Trust, said the SG increase is not only necessary to boost the adequacy of retirement savings, but is supported by many Australians.
Among those who rate their knowledge of superannuation as ‘beginner’ level, nearly one in three (29%) strongly agree with the proposal to boost the SG. Those with ‘advanced’ knowledge were even more emphatic, with 51% strongly agreeing.
The Financial said Mercer also found that Australians continue to have significant gaps in understanding important aspects of their superannuation. One in five did not know the investment option their super was invested in and the same amount were unsure of the tax effectiveness of super.
To shift the dial in terms of Australians’ retirement readiness Mercer believes Australia’s superannuation system needs stronger default investment options that address whole-of-life timeframes and more personalised retirement income forecasts for members.
Australians’ level of understanding coincides with their preparedness for retirement: only 27% of members with a low level of knowledge about super have made preparations for retirement. For members with moderate knowledge, that figure rises to 53%, and 71% for those with a high level of knowledge.
Working Australians with a high level of knowledge are three times more likely to be positive towards their fund, compared to those with a low level. Twenty-four per cent of ‘beginners’ rated their fund as trustworthy and were satisfied with it, compared to 78% of ‘advanced’ members who trust their fund and 77% who are satisfied with it.
Mercer says most superannuation funds need to provide a range of quality, education resources, from personal consultations, including limited financial advice available over the phone, through to website tutorials and workplace educational seminars.“Employers can also play a role by helping to raise awareness of their superannuation fund’s tools and education options, as well as providing opportunities for employees to learn about superannuation at work,” Dawson said, according to the news report.