Would you say you have a good understanding of how superannuation works? If you say you do, and you are correct, then you’re in the minority. The latest research says the public understanding of how super works to grow people’s savings remains low.
To address this issue, the Super Members Council (SMC) has launched a new online initiative called How super works. As well as having a dedicated web page, How Super Works content will be featured on social media platforms.
The SMC CEO Misha Schubert said the campaign features everyday Australians with super talking in clear and simple language about how super works. “The more you know about super, and the more engaged you are with your super, the better you can make super work for you,” she said.
What we know and don’t know about how super works
In a Pyxis Polling and Insights survey, the extent of our lack of knowledge about super was laid bare. The poll found seven in 10 Australians don’t know the Super Guarantee rate. Even more – 75 per cent – could not nominate super’s low tax rate. The survey also found that a third of the respondents check their super balance less than once a year.
Does that lack of knowledge of how super works really matter? Some might argue it doesn’t,
as long as they have someone with appropriate expertise look after their finances.
However, research indicates that Australians who feel they understand super are more likely to be engaged with their savings. What’s more, they’re more likely to be happier with their financial decisions, and strongly support the super system.
The survey, which involved more than 1000 respondents, revealed two key insights into Australia’s superannuation psyche. They are:
- Australians’ satisfaction with their super fund’s performance is highest amongst those who say they understand super. 57 per cent said they are in a fund performing well.
- Nearly 90 per cent of Australians with a good understanding of super say it makes them feel more confident about their finances. In contrast, only 60 per cent of those who say they have an average or below average understanding of how super works feel the same way.
Improving our knowledge
It’s quite clear, then, that a better understanding of superannuation has its benefits. So how will SMC’s How Super Works help? In its media release, the Council said: “The initiative delivers accessible messages, facts and data about super and how it works.”
Ms Schubert raising awareness was a key component of How Super Works. The aim is to demystify super and put more Australians in the best position to maximise their superannuation, she said.
One of the reasons for the low rate of understanding may be the fact that it’s now more than three decades since the current system was launched.
“Nearly three-quarters of workers today weren’t in the workforce when super was legislated 32 years ago, Ms Schubert pointed out. “So it is timely to help more Australians understand how this system works for them – and why it is the envy of the world.”
The How Super Works page is available here.
Would you say you have a good understanding of how super works? Will you take advantage of the new initiative? Let us know via the comments section below.
Also read: Modernising super could be a win for all Aussies
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I was a devotee to superannuation at a young age and it has served me well.
However having just lost my wife and arranging my affairs I came across an “inheritance tax” paid on my unused superannuation.
I Have 60 years paying super and not one financial adviser has ever mentioned this tax.
As I am 78 and did not realise my children,as they are over 18 , are not dependants. Silly me!
Apparently I need to predict my death and prior to dying need to draw all super out and bank it.
Another option is to leave my super to my estate and I will investigate this option.
The inheritance tax for me is about 100k
Just warning oldies to be aware.
Cheers
Hammo, did your financial advisers tell you the disadvantages of having more than the minimal amount in Super that denies you ‘free’ Aged Pension money and benefits that those without a life time of saving get for free?
I am sorry to say the super funds here are a money making racket. Even an ASX company just close shop, and a few other companies have been rolling down the shutters. So how much trust can we have in these registered enterprises. I don’t understand why can’t the Govt could not run and manage the Super Funds for all its citizens. Pay the members the same interests while at the same time the Govt could utilize the funds to pay for infrastructure (as if they were borrowing from the bank and paying the banks interests.) Such interests could be distributed out to the members annually as interests. Also allow members to withdraw a percentage of their super (depending on how they have saved) to buy homes. at least this would solve part of the housing crisis instead of making the landlords richer and richer.