Market volatility and an online simulator that allows super fund members to “stress test” the effects of share market fluctuations on their retirement savings are driving more people to engage with their superannuation fund, according to recent data from Mercer.
Jo-Anne Bloch, Financial Advice leader at Mercer said recent share market volatility has again cast the spotlight on superannuation returns, which has the knock on effect of encouraging members to pay more attention to their superannuation.
“Not surprisingly, market volatility has driven a spike in enquiries across all our engagement channels. It is important members can access advice and tools which allow them to make informed decisions in the context of their own investment horizon and objectives.”
In the past fortnight, Mercer has reported a 15% increase in calls to its helpline for members of the Mercer Super Trust and stand-alone funds serviced by Mercer. Nearly 800 members of the Mercer Super Trust consulted Mercer’s website for information on the latest round of share market movements. The volume of members requesting phone-based advice increased by 30% over the past fortnight.
Mercer’s Retirement Income Simulator, which allows members to “stress test” the effects of market volatility or career breaks on their retirement savings, is spurring members into action. A recent survey found 61% of respondents who had used Mercer’s Retirement Income Simulator, a sophisticated online tool which provides a personalised forecast of a person’s income in retirement (as opposed to a lump sum figure), said they intended to take action regarding their superannuation in the next 12 months, including making additional salary sacrifice contributions or reviewing their investment options.
A further 75% felt the tool was valuable in helping them to better understand their retirement income needs.
The results are particularly interesting when single-figure super retirement projections have been criticised recently for not being accurate. Unlike calculators that only provide a single-figure retirement projection, the Mercer Retirement Income Simulator allows members to build personalised forecasts based on all income sources and can apply variables such as career breaks, market fluctuations, periods of reduced earnings, increased salary sacrifice contributions, and salary growth. It presents results in today’s dollars.
Further, the calculator provides projected income in retirement rather than simply providing a lump sum amount. Members can determine exactly how much their super will translate to each week once they have retired. This is a far more useful indicator of whether there will be enough to live on than one big sum of money which sounds good but could be misleading.
Ms Bloch said sustaining member engagement is one of the greatest challenges for all super funds, particularly with a consolidating industry and ongoing economic uncertainty. One of the most effective ways to do this is to provide people with easy tools to enable them to plan for their retirement using their own personal circumstances.
“When members use Mercer’s Retirement Income Simulator they’re able to replicate the reality of life and the reality of investment markets. This gives them a longer term perspective on the short term fluctuations and is proving to be an effective means of kick-starting members into action,” said Ms Bloch.
Mercer will continue to make a substantial investment in developing the online simulator and related personal advice capabilities, which underpin the firm’s member engagement strategy.
Mercer’s Retirement Income Simulator is available to the 240,000 Mercer Super Trust members, and potentially to members of superannuation funds Mercer acts as a service provider to.
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