Not according to half of all Australian workers; an ING DIRECT and Financial Services Council (FSC) survey of over 1,200 Australian workers in August 2015 founds that only 49% believe that their superannuation will provide enough income for a comfortable retirement.
80% of Australians support an increase in superannuation contributions to 12 per cent over the next decade.
The FSC/ING DIRECT Your Super Future report also shows there is a growing awareness amongst Australians of the impact of fees on superannuation, with 38% saying fees are too high. Around 56% of Australian workers feel ‘in control’ of their super and able to make informed decisions, and 64% of Australians claim to know the actual amount in their super funds. 49% of Australians are unaware of the level of fees their fund charges. These are the superannuation fees you can expect to pay.
The Your Super Future report shows many Australians are gambling with their retirement, pinning their hopes on an inheritance to supplement their super, rather than making practical plans for additional income.
Of the 55% of Australians who intend to supplement their super with outside sources, one in five are relying on inheritance.
“A large number are relying on a cash inheritance from parents or grandparents to plug the gap. The message needs to get through that far from a guarantee, inheritance is not a sound financial plan”, said Lisa Claes, Executive Director of Customer Delivery at ING DIRECT.
In light of the report, CANSTAR caught up with Ms Claes for a quick Q&A:
Q: It’s worrying that almost half of all consumers don’t know what they are paying in super fees. What could that lack of knowledge cost them each year?
A: It can be significant. On average, people are paying approximately $2,000 each year in superannuation fees, and over the course of a lifetime fees can eat a hole of a hundreds of thousands of dollars in your retirement balance.
38% of Australians say their super fees are too high, but fees are something we can all control. Check your statement or contact your provider to find out what fees you’re paying, and make sure your super is working in you favour. If it’s not, consider switching.
Also, if you have more than one super fund that means you’re paying more than one set of fees – so make sure to consolidate and minimise the impact of those fees! Many super providers, including ING DIRECT, offer an automatic electronic rollover process to make consolidation very simple.
Q: Technology has a lot to offer to super fund members. Even though super is a long-term investment, is it a good idea for workers to have their super account details easily on hand, either via an app or website on their phone?
A: Absolutely. 62% of people think there is not enough transparency around super funds and in particular around fees, and only 56% feel in control of their super. While there is a definite need for education, technology can go a long way to helping people feel more in control and in turn more engaged and confident.
Our customers can view their Living Super account balance on our app, alongside their everyday banking. It keeps super front of mind and means our customers can track how their retirement fund is performing against their goals.
Q: A surprisingly large proportion of people seem to be assuming that an inheritance will boost their retirement wealth. Do you think this is perhaps a false sense of security?
A: The majority of people support the superannuation system and see it as essential in providing a comfortable retirement. While an inheritance would of course be lovely, it’s not a guarantee so it could be very dangerous to rely on it.
We should be focusing on what we can control to make the most of our super. While we can’t control the investment markets, most of us have choice in our super fund and we can control our fees. Switching is increasingly simple so don’t be afraid to make the change if your current super isn’t working for you or your fees are too high.