Monday, October 25, 2010

High anxiety. Superannuation scares us

It should. Our system callously exposes us to risk

Australia's superannuation system, touted as among the world's best, is little understood and a cause of "high anxiety" at home.

Previously secret research prepared for the Tax Office involving 16 focus groups, 50 in-depth interviews and more than 2400 phone interviews finds us bewildered, guilty and with "deep-seated fears" the aged pension will be abolished.

Conducted in the midst of the financial crisis and published Sunday on the Treasury website the research finds us "shocked" by the collapse in superannuation savings brought about by the crisis.

"People had assumed that superannuation amounts were somehow guaranteed and separate from market fluctuations," says the report by Colmar Brunton Social Research. "There was little understanding that superannuation is an investment portfolio like any other."

"I think it has had a deflating effect," said one small business employer. "You are expecting the thing to be working away in the background and then you get a statement and you are worse off than when you started."

"It's unpredictable," said a worker aged 30 to 44 years. "It's good now, but who knows in 20 years time?"

"The pension won’t last much longer, pensions are a luxury,"... said another young worker. "It's a user-pays system now."

The "deep-seated fears that the aged pension will be abolished and that there will no safely net" are at odds with moves by both the Howard and Rudd governments to boost access to and the size of the pension.

The report finds "a high level of anxiety" among Australians aged 30 to 44 who "see their children being disengaged with superannuation and also see their parents deferring retirement or reverting to pensions due to superannuation losses".

"There is a sense of guilt about superannuation among this group," the report says. "They know they should understand superannuation and be more active in managing it, but they make myriad excuses for why they will do it later."

Releasing the research Assistant Treasurer Bill Shorten said it provided support for the government's plan to lift compulsory super contributions from 9 per to 12 per cent.

But while consumers do say 9 per cent will not be enough, the overwhelming impression is one of ignorance about what is enough.

The Henry Tax Review found against increasing lifting compulsory contributions reporting this put pressure on low to middle incomes.

Labor announced plans to legislate for higher super contributions on the same day as it unveiled the Henry recommendations.


"A few years ago I had more. It doesn’t seem like it’s gone up at all." - Young worker

"I don’t think there will be a pension in years to come. The rules will change again and again." - Older worker

"Why on earth would you contribute to super if you didn’t have to? They have mortgages on homes, young children." - Small employer

"I don’t think about it until retirement. You worry about it later." - Young worker

"If you tell an employee to go with a particular fund and it doesn’t work - that leaves you open to being sued." - Small employer

"You place a lot of trust in people to manage your money on your behalf. I haven’t really looked into it." - Older worker

"I read what they send me but it doesn't make much difference." - Older worker

"the super funds know our ages. They could send information more suited to our age." - Young worker

Source: Understanding Superannuation, Colmar Brunton reports to the Australian Tax Office.

Published in today's SMH and Age

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