HALF OF Australia’s superannuation fund holders will consider changing funds once new legislation, which enables people to choose the super fund into which their employer pays their contributions, takes effect from 1 July next year
HALF OF Australia’s superannuation fund holders will consider changing funds once new legislation, which enables people to choose the super fund into which their employer pays their contributions, takes effect from 1 July next year.
A recent ACNielsen survey of more than 2,600 superannuation fund holders found that the most common motive cited for changing their super fund was better returns (62 per cent) followed closely by reduced ongoing fees (59 per cent).
However, there was a general lack of consumer awareness of super-related issues. A quarter were unaware of the performance of their super fund over the previous 12 months, the quality of the people running their fund or the range of investment options available through their superannuation fund provider.
This general lack of awareness around super choice was also highlighted in a recent Association of Superannuation Funds of Australia (ASFA) survey, which found that nearly 60 per cent of employees felt they didn’t have enough knowledge to consider changing funds, while less than one-third could differentiate between the investment returns of separate funds.
Additionally, of those who were very likely to change funds, 58 per cent were planning to turn to financial advisers as their primary source of advice, followed by friends and relatives, the super fund, the media and their employer.
Education will be a crucial element in choice of fund. With final super choice regulations due in March 2005, this left very little time for information, let alone education, according to ASFA.
Paul Clitheroe, chief commentator for Money Magazine and founding director of financial planning firm ipac, said education around financial literacy was key to helping employees with superannuation choice.
Speaking at the recent AGSM annual conference, Clitheroe said millions of Australians lack the basic financial knowledge to manage their debt, protect their assets or grow their wealth.
“Super choice is a fantastic opportunity to talk to adults in the workplace about financial literacy. If hundreds of millions of dollars are going to be spent on super choice education, why don’t we make it real and talk to people about money first?” he said.
Clitheroe said people needed to meet a basic benchmark in their ability to manage cashflow, where they spent at least no more than they earned and had some ability to articulate at some point in their life when they might like to stop work and what the cost would be.
