Concerns super funds are getting it wrong in helping you prepare for retirement

A new Australian study has raised concerns about how the government and super funds are interpreting retirement preparedness data. The study found 78 per cent of pre-retirees did not consider themselves ready for retirement.

This is a similar figure to data from a separate survey released in January, which showed only 20 per cent of Aussies expected to have enough money to retire.

That study, titled the Global Retirement Reality Report, was published by State Street Global Advisors. The new report, conducted by Capital Preferences and supported by Challenger, supports those earlier findings.

The Capital Preferences report, titled Revealing Member Income Preferences, also looks at the underlying factors driving pre-retirement uncertainty.

The reasons for doubts about retirement preparedness

What the study uncovered was that there was no clear link between preferences for income certainty and salary, age or super balance. Instead, the factors were far more nuanced and complicated. Preferences and concerns were “highly individualised”, making grouping data a difficult proposition.

In turn this could lead to government and super funds misinterpreting data when using it to create retirement preparedness strategies.

Capital Preferences co-founder and chief scientist Shachar Kariv explained the potential shortcomings. “Simply relying on demographic data to predict income certainty preferences will almost certainly misdiagnose members,” he said. As a result, this could “hinder super funds in providing fit-for-purpose retirement income assistance”.

Mr Kariv said the Capital Preferences report also highlighted a lack of knowledge of certain products that deliver retirement preparedness. He highlighted what he said were the top two contributing factors associated with a greater sense of retirement preparedness.

They were home ownership and ownership of a guaranteed lifetime income product (GLI), such as an annuity. However, the Capital Preferences report indicated that, of Australians aged under 65, two-thirds had no knowledge of GLI products. Further, only 8 per cent of those aged 55 to 65 had any awareness of GLI products.

Capital Preferences intimated that GLIs could help pre-retirees attain their long-term income certainty preferences, delivering that goal of retirement preparedness. But its research indicated that of the $1.23 trillion pool of retirement income savings, including superannuation, GLIs comprised only $43 billion.

While $43 billion sounds like a lot, it represents only 3.5 per cent of that total pool.

A future of being better prepared

Mr Kariv believes the Capital Preferences report shows a need to widen the scope of future retirement preparedness surveys. “Our findings highlight the importance of recovering individual preferences as part of the member experience,” he said. “Members can’t self-report their preferences in areas of risk, but they can show us with their decision-making.”

The Capital Preferences report will be one contribution to a consultation initiated last year byfinancial services minister Stephen Jones. This consultation examines how superannuation members can be supported in navigating the retirement income system. It also looks at how funds can deliver better retirement income products and making lifetime income products more accessible.

Today is the final day of that consultation process.

Do you feel you have adequate retirement preparedness? What could the government and super funds do to help? Let us know via the comments section below.

Also read: How to discover your perfect retirement age

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Andrew Gigacz

Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


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  1. Far too many have an obsession with leaving a sizable inheritance for their children. That was never the purpose of superannuation, simply the rort that the excessively wealthy turned it into on their part so they could avoid tax. But for most folk, the purpose of superannuation was to provide a top up to the age pension so they could have a decent lifestyle after retirement. This has been undermined by conservative governments in never allowing the contributions to reach the intended 15% contribution rate, and by the same conservative governments expecting people to live on only a decade or two of contributions and making access to age pensions more difficult, on a more restrictive reductions for existing and newly gained assets, and stretching out the eligibility age farther (by 7 years in total for women who came into the workforce with a pensionable age of 60 and now they are reaching 60 finding it to be 67 – why women aren’t up in arms more is a mystery).

    Ultimately, life is finite – none of us know the end date – so people should seek to retire as early as they can and enjoy the life they have left. Spend your super and demand the maximum you can get from age pension.

  2. I don’t see super funds as the problem. I see the government’s attitude to retirement as the issue. Successive governments have decided that the superannuation system relieves them of obligations, but they ignore key facts. Firstly, the super system hasn’t been in place long enough to serve current retirees in the manner it was created to service their needs. Secondly, the super system cannot possibly ever fund the retirement of very low income earners or those whose work life is substantially interrupted by illness, accident, unemployment, carer obligations, etc. We still need a robust pension system funded through taxation. And the system that currently exists is heavily flawed and the flaws are being increased by poor government decisions. Pushing back the eligibility age, for example, ignores the fact that the lowest income earners (those with the least resources to fund independent retirement) are the most likely – due to physical and often mental stress in their work life – to need to retire early.
    The means test is economically unsustainable and seriously inequitable. It effectively penalizes the frugal and responsible and the honest, and rewards irresponsible lifestyles and manipulative and dishonest practices, while costing the taxpayer a fortune to impose the inequitable and economically disadvantageous rules.
    Super has been created as a tax haven for the rich. The money funding tax concessions on high balance super accounts is equal to the total cost of the aged pension, but the former benefits the wealthy while the latter benefits those in evidenced need.
    I don’t agree that there is a problem with people having an obsession with leaving an inheritance for their children. If there is, the government created and fosters it with tax benefits to people who don’t need them and limited aid to people who do need help to save for old age. But the reality is that superannuation is nothing more than compulsory savings. And people should be free to use their savings as they choose, without penalty. The current system rewards those who choose to take expensive holidays, buy luxury mansions, and gift to kids five years before retirement. Yet it punishes and demeans those who want to put a little aside for their kids to inherit. Whether it’s in super or private savings, it is money the person earned and put aside for later. So it should be their choice how and when to spend it and they should not be penalized or suffer loss of benefit regardless of the choice they make.
    The simple and fair solution is a universal aged pension from age 65 and for anyone under 65 who can evidence genuine incapacity to continue working as a result of work-related stress or injury; tax all retirement income; and end tax concessions on super except on employer-funded contributions to funds with a balance lower than the figure deemed adequate to fund a modestly comfortable retirement (currently approx. $800,000 for a couple).
    Abolish income and assets testing. Let people spend their savings as they choose. Encourage and reward sensible planning and lifestyles, but recognize that if people want to life more frugally to leave more to their kids, they should not suffer either penalty or denigration for doing so but neither should they enjoy better state-funded benefits than people making other choices.

  3. The push for people to subscribe to LNI’s seem to me just another way to force people to put large amounts of money into the hands of companies who see there main purpose in life to make huge profits for their executives and share holders.

  4. Super Funds should be investing our funds in ways which will ensure a good return for us, not throwing it away on airy fairy woke issues which return us nothing. The amount of money we are charged for administration fees is also too much, especially seeing once they have our money they don’t do a great deal for us. I used to see my financial adviser twice a year until he retired. My fund then decided that I would need to see someone who was based in Wollongong and it was going to cost me considerably more than what it was previously. I don’t bother any more and am seriously considering changing funds.

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