Australians are feeling more optimistic about the future of the economy, but share market volatility has affected their confidence in superannuation and their preparedness for retirement, according to the latest Mercer Superannuation Sentiment Index.
Mercer's Superannuation Sentiment Index revealed the majority of Australians (58%) felt very or fairly optimistic the economy will improve following recent share market gains. Yet concurrently, the global financial crisis is still impairing sentiment towards superannuation, which declined further in December 2009 to a rating of 37 out of a possible 100 (compared to a 42 rating the year earlier), showing that sentiment towards superannuation lags share market performance.
Heather Dawson, partner at Mercer said, "Despite a more positive outlook for the future, the experience of the last two years has not been forgotten by Australians, many of whom are still dealing with the impact of the global financial crisis on their personal finances and superannuation balances."
Recent economic events have dampened Australians' trust in superannuation, as people realise they are not as prepared for retirement as they once thought and face the possibility of being significantly less comfortable in their later years than they are now. Only 11% of working Australians feel they are thoroughly prepared for retirement.
"The industry also has an opportunity at this time, to make good some of the shortfalls in the system that have been exposed over the past few years. This again can be as fundamental as reshaping the means in which we communicate, through to structural changes to investment defaults to help improve member outcomes in retirement, in particular considering whole-of-life investment options as a way to improve long-term financial well-being " Dawson continued.
The study showed that while the majority of working Australians expect superannuation to be the dominant source of funding for their retirement, 3 in 5 expect to be less comfortable in retirement than they are now.
Yet people are keen to learn more. Seventeen per cent of working Australians rated their knowledge of superannuation as strong or sophisticated, while many (55%) aspired to that level.
Mercer's Superannuation Sentiment Index is based on an online survey of 1,033 full time working Australians aged 25-65 years, and was conducted in December 2009. The research has been conducted every six months since June 2008. The latest research is designed to gauge Australians' changing attitudes towards superannuation and retirement post the Global Financial Crisis, and in an environment of intense scrutiny on superannuation funds.