A Newspoll telephone survey conducted by AIST following January’s sharemarket correction suggests as many as three in four Australians would support a lifting in compulsory super to 12 per cent by 2012, if that increase was partly funded by the Government and partly funded by themselves.
More recently a Commonwealth Bank survey found that the increased sharemarket volatility had prompted many baby boomers into changing the way they would plan for their retirement. More than 77 per cent of respondents said they intended to make additional voluntary contributions to their super.
Most super funds have already begun the process of educating their members about return expectations this year. Like AIST, the message they are spreading is that while funds returns will be lower this year, the average super fund is still up by about 70 per cent over the past five years. As unpleasant as the recent sharemarket fall may be, medium to long-term super fund investors are sitting on healthy gains while new investors – for whom retirement is still a long way off – have plenty of time on their side to ride out sharemarket volatility.
Tough economic conditions also mean that simple, personalised and helpful advice for members becomes even more important. The Government’s plan for a short form of product disclosure statement is certainly a welcome and long overdue initiative. Each fund member should be able to understand at least the general features of the how the system works and the particular features of their own fund.
We are living in volatile times. But if the past tells us anything about the future, the market will recover, super fund balances will continue to grow and, in doing so, further the public’s interest.