Education the key

The link between financial education and retirement savings will represent a key element of this year’s Conference of Major Superannuation Funds (CMSF) being held on the Gold Coast from April 10 to 12.

With the results of a recent IUS/Super Review Super Outlook survey indicating that most people now believe financial planning has become an integral offering for superannuation funds, the CMSF will closely examine the changes being wrought by the new choice of superannuation fund regime.

However, while there has been plenty of debate surrounding the role of financial planners in the context of choice of superannuation fund, the concentration of the CMSF will be on financial education and, in particular, the results of research undertaken by UniSuper.

The UniSuper research looks at how best to target member education and draws parallels between the Australian experience and research undertaken by its sister fund in the US, the giant Teachers Insurance and Annuity Association — College Retirement Equities Fund (TIAA-CREF).

The TIAA-CREF research, published in October last year, makes the point that academics in the US are broadly better prepared for and more confident about their retirement because they are in possession of more information.

The TIAA-CREF survey was designed to better understand the retirement planning and savings behaviour of college and university faculty members, as well as to gauge faculty member perceptions regarding various aspects relating to their retirement preparations.

According to the authors of the survey, an additional objective was to compare the attitudes of higher education faculty members towards their retirement preparations with those of working Americans.

The bottom line of that comparison was that while over 80 per cent of US academics were either very confident or confident of their retirement position, only 25 per cent of working Americans were similarly confident.

The survey said that while members of higher education faculties tend to be older, have higher incomes and have higher education levels relative to the general working population, they also benefited from the retirement systems in place.

One of the most interesting findings from the US survey was that most academics surveyed indicated that they had used the advice of a financial professional.

It said that while 91 per cent indicated they had listened to advice from a spouse, only 15 per cent found such advice to be helpful.

“The advice of a financial professional is most often cited as the most helpful (37 per cent), and 61 per cent of faculty report using such advice.”

It said other sources commonly used included print material from the retirement plan (67 per cent), advice from family and friends (53 per cent), newspapers and magazines (48 per cent), seminars sponsored by the retirement plan or plan provider (47 per cent), the internet (44 per cent), plan provider website (41 per cent), and advice of colleagues (40 per cent).

The survey said that in the past three years, 33 per cent of faculty members had attended a retirement planning seminar sponsored by their college or university or retirement plan provider, and that 42 per cent reported making planning and savings changes as a result of the seminar.

The survey concluded that adequate financial planning and preparations were necessary so that faculty members could achieve a financially secure retirement and, to that end, many faculty members had already utilised the advice of a financial professional when making their retirement savings investment decisions.

“Converting savings into a steady stream of income that lasts for a lifetime is also crucial to a secure retirement,” it said. “The majority of higher education faculty report that they would be likely to use professional advice regarding withdrawal strategies for their savings in retirement if their employer provided access to such advice.”