Australians largely ignorant about super: Russell research

By Jit Kumar
Image by Nattanan Kanchanaprat from Pixabay

Right asset allocation at the right time is critical, says Jodie Hampshire

As the Covid-19 economic downturn forces many young people to dip into their super funds years ahead of their retirement, a new study has revealed that Australians are largely ignorant about the asset class that is absolutely crucial in having a successful post-work life.

The study commissioned by global fund manager Russell Investments included a poll of 3,000 working Australians.

Super is a way people accumulate money for retirement.  It is compulsory for employers to make superannuation contributions for their employees on top of the employees’ salaries.

But what the study found was widespread ignorance and misconceptions among Autralians about super funds and the way retirement assets are managed.

According to the research, two-thirds of Australians mistakenly believe that super funds pro-actively protect their savings from potential losses. In fact, more than a third think that super is managed based on their personal circumstances.

A whopping 67 per cent of respondents said they were not aware how their super was invested, while some just preferred to leave it to their funds’ default investment option. And an equal number believed their fund would actively or automatically rebalance portfolios to protect members from an economic downturn.

Surprisingly, more than one in five respondents (21 per cent) did not know that they had a say in their own investments in super.

On the other hand, some 28 per cent admitted in the survey they had picked their own investments in super, despite not having adequate knowledge about the same. Ironically, one in four admitted to having relied on friends or relatives for the same.

According to the study, only 21 per cent of those who have set goals know how to achieve them.

That’s what concerns Russell Investments Australian MD Jodie Hampshire. “For working Australians, asset allocation is one of the strongest factors driving retirement income adequacy. Having the right asset allocation at the right time is critical,” she says.

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