AUSTRALIA - Simple, low-cost financial advice should be incorporated into the MySuper default fund structure offered by superannuation funds to increase members' engagement with their pensions, according to Mercer.
In its latest Mercer Superannuation Sentiment Index, a survey of 1,028 working Australians, 43% of those who had sought financial advice were confident their savings would be sufficient, compared to only 30% of those without an adviser saying the same.
According to the study, people who had sought financial advice were generally more positive towards their main superannuation fund, rating it highly for being financially secure, trustworthy, and holding a positive view towards its investment performance. They were also more likely to rate their knowledge of superannuation as strong or sophisticated with 82% of those who have an adviser saying they were confident in their knowledge about superannuation, compared to only 63% of those who did not have an adviser relationship saying the same.
"The more people are engaged with their superannuation fund, the more secure they are with its performance, regardless of external factors. They will take a longer term view of superannuation which is the right way to look at it," said Jo-Anne Bloch, financial advice leader at Mercer. "Advice is the crucial link."
MySuper is a proposed default fund option that would be mandatory for all superannuation fund providers. The 2010 Cooper Review proposed that all superannuation funds offer a default fund option that would capture enrolees that either automatically opt into an employer's chosen superannuation provider or enrolees that choose a superannuation fund but not a particular investment option. MySuper is designed to reflect the reality that the average member account balance is below A$25,000, and that 80% of members hold their assets in a default strategy of a superannuation fund, according to statistics in the review. The government is currently drafting proposed legislation to create the MySuper structure.
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