Super confidence badly shaken: Mercer

The fall in share markets has served to significantly undermine confidence in superannuation as a savings vehicle, according to the latest research from Mercer.

The number of Australians who consider superannuation either a ‘poor’ or ‘fair’ way to save for retirement more than doubled from 17 to 35 per cent over the 12 months to July 2009, according to Mercer’s Superannuation Sentiment Index. Meanwhile, the number of respondents who rated super as a ‘good’, ‘very good’ or ‘excellent’ way to save for retirement fell from 80 per cent to 62 per cent.

The research found sentiment towards super is a lagging indicator against the All Ordinaries Index.

“With share markets slowly recovering from the lows of the last 12 months, it is possible a rebound in sentiment towards superannuation is imminent,” the Mercer report said.

“However, this will heavily depend on the role of government, industry and superannuation funds in rebuilding trust.”

According to Mercer’s index, only 44 per cent of people rate the trustworthiness of their fund as ‘very good’ or ‘excellent’, with the level even lower among younger Australians.

The Mercer research also confirmed the level of disengagement Australians have with super, with almost a quarter not knowing what investment option their super was in and almost 20 per cent unaware of the tax effectiveness of the vehicle.

Mercer executive David Anderson said the findings should represent “a clear call to action for the superannuation industry”.

Anderson said the superannuation industry needed to “innovate with new products, whole-of-life investment options and encourage members into high growth investment strategies early”.

Mercer’s index is based on an online survey of 1,025 full-time Australian employees aged between 25 and 65.