Super members salary sacrifice more with retirement estimates
Showing superannuation fund members their projected retirement wealth encourages higher rates of salary sacrifice and engagement, according to a report.
The proportion of super members who made a salary sacrifice contribution was 33 per cent higher if they received a retirement income estimate.
The report by the ARC Centre of Excellence in Population Ageing Research (CEPAR) found that members tended to focus more on the present than the future, and that members had difficulties in making compounding interest forecasts.
Lead author of the report, George Smyrnis, said super fund members had poorly formed expectations of their retirement wealth.
The report said Cbus has showed members projected retirement income estimates (RIE) and this motivated additional savings, raised member investment choices, and raised engagement with the super fund.
“Overall, the presentation of the RIE encouraged higher rates of salary sacrifice saving, and higher average amounts of salary sacrifice and voluntary contributions, as well as changes in investment options, compared to those who did not receive the RIE,” Smyrnis said.
“The presentation of the RIE also encouraged higher rates of engagement between members and the super fund, particularly for advice, and for admin and processes related interactions. These results are important evidence that superannuation member disengagement can be partly improved by clearer communication.”
The report said the proportion of members who made a salary sacrifice contribution was 33 per cent higher when they received the RIE. Members who received the RIE also contributed 35 per cent more on voluntary contributions than members who did not receive the RIE.
Source: CEPAR
Smyrnis said the RIE was an important tool to help understand how adequate a member’s savings were.
On engagement 35% of the RIE group interacted directly with Cbus compared to 24% of those who did not get the RIE
Source: CEPAR
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
