Lack of superannuation knowledge
AS regulator of SMSFs, the ATO revealed a few years ago the lack of basic knowledge about self-managed super and superannuation law among a minority of new fund trustees.
And the latest Mercer Superannuation Sentiment Index, discussed in a recent Smart Investing column, confirms once again an extreme lack of superannuation knowledge among a wider sample of fund members.
A survey conducted in mid-December for the index found in relation to superannuation knowledge:
• Almost half of those surveyed did not know whether they were in an accumulation or defined-benefit fund.
• More than a fifth did not know what investment option held their super.
• More than a quarter were uncertain of their super balance.
Given the GFC, the severe bear market and the subsequent rebound in share prices, it could be assumed that many more members than usual had an intimate knowledge of the workings of their super fund at the time the survey was conducted.
Sadly, it seems, countless members passed through these momentous events with an amazing lack of knowledge about even their own super – let alone super in general.
Presumably, a number of members surveyed would have had extremely low balances and been new to the workforce. But this is hardly an acceptable explanation for their lack of superannuation knowledge.
Certainly, many large super funds are making considerable efforts to provide their members with access to basic superannuation education. But one of the biggest challenges is persuading members to take advantage of what is being offered.
Interestingly, the ATO and ASIC are providing fundamental education to supplement what is being provided by super funds and some financial planners, depending upon whether they are involved.
The ATO’s online publication Superannuation Tips for Young People gives an easy-to-read overview of superannuation fundamentals – which, despite the title, should be valuable to members of all ages. Another ATO publication, Individuals’ Superannuation Essentials, digs deeper.
ASIC’s lineup of superannuation education includes an online animated movie with an ambition to teach young people about super years before they join the workforce.
Listen to the audio podcast:
Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.