Confidence improves despite share market volatility

Confidence improves despite share market volatility

Confidence improves despite share market volatility: Mercer Superannuation Sentiment Index

  • 12 December 2011
  • Australia, Melbourne

Australians are showing the highest level of satisfaction in relation to their superannuation fund since December 2008, according to the latest Mercer Superannuation Sentiment Index.

Increased member satisfaction, reduced levels of concern about share market volatility and more realistic expectations of future superannuation balances drove a 9-point increase in the overall ‘sentiment score’, from December 2010 to September 2011.

Working Australians have shown a considerable improvement in their understanding of the effects of share market volatility on superannuation, with the majority (77%) showing at least a moderate level of understanding, up from 63% in June 2008. At the same time, fear of market volatility and unrealistic expectations of high returns have both declined. These results suggest efforts by the superannuation industry and the Government – and probably the media during the recent market volatility in September – to educate members about superannuation has significantly helped to improve widespread engagement.

Mercer’s study also revealed Australians’ trust in their superannuation fund has increased, with 57% rating this as ‘very good/excellent’, demonstrating an 11 percentage point increase since December 2010. Employees are also showing a significant increase in satisfaction with the benefits and features of their super fund, with 62% being ‘satisfied’, up from 48% in December 2010.

Heather Dawson, leader of the Mercer Super Trust, said the survey results suggest working Australians are becoming more astute about their super.

“Empowering members with knowledge has gone a long way to alleviating angst in the midst of volatile market conditions. There is increased understanding of the impact share market volatility has on super, but while sentiment has significantly improved from previous years, super funds will need to continue building  loyalty and engagement with members,” Ms Dawson said.

Mercer’s survey also found Australians are increasingly reliant on superannuation to fund their retirement – with respondents anticipating 49% of their retirement funding will be sourced from superannuation, up from an average of 43% in December 2010. This increase has come at the expense of other sources, namely investments and other assets. With such a heavy reliance on superannuation, funds need to ensure they help improve member outcomes in retirement.

“We saw many super funds stay in touch with their members through daily website updates during the peak of the market volatility as well as dealing with an extraordinary high number of calls to contact centres and website traffic. This is certainly evidence of greater engagement,” Ms Dawson said.

“Employers, Government and superannuation funds all have an important role to play in educating working Australians about how to get the most out of their superannuation, and improving access to education and advice services to facilitate early retirement planning.

“The data in the Superannuation Sentiment Index confirms our recent decision to launch “whole-of-life” investment options in the Mercer Super Trust as a unique way to improve long-term financial well-being and we’re excited about that,” she said.

The use of mobile phone apps may be another way to engage further with members. The study showed that nearly half (44%) of smart phone owners believe they would utilise a mobile app to download information about their superannuation – suggesting an appetite for “finger tip” information, helping to raise engagement with a broader base of members.

“We’re certainly committed to a more personal relationship with our members and development in new technology allows us to increase the chances of everyone achieving a comfortable, enjoyable retirement,” Ms Dawson said.

Mercer’s Superannuation Sentiment Index is based on an online survey of 1,001 full time working Australians aged 25-65 years and was conducted between 27 September and 4 October 2011. The research is designed to provide a snapshot of working Australians’ sentiment towards superannuation.

About Mercer

Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @MercerAU @MercerInsights