Australians anxious about superannuation

Australians do not understand and are anxious about our superannuation system, according to research undertaken by the Australian Tax Office and reported on by The Age’s economics correspondent, Peter Martin.

Previously secret research prepared for the Tax Office involving 16 focus groups, 50 in-depth interviews and more than 2,400 phone interviews finds us bewildered, guilty and with “deep-seated fears” the age pension will be abolished.

Conducted in the midst of the financial crisis and published on the Treasury website, the research finds us “shocked” by the collapse in superannuation savings brought about by the financial crisis.

“People had assumed that superannuation amounts were somehow guaranteed and separate from market fluctuations,” says the report by Colmar Brunton Social Research.

There was little understanding that superannuation is an investment portfolio like any other.

“I think it has had a deflating effect,” said one small-business employer.

“You are expecting the thing to be working away in the background and then you get a statement and you are worse off than when you started.”

“It’s unpredictable,” said a worker aged 30 to 44 years.

“It’s good now, but who knows in 20 years’ time?”

“The pension won’t last much longer, pensions are a luxury,” said another young worker, “it’s a user-pays system now”.

The ”deep-seated fears that the age pension will be abolished and that there will no safely net” are at odds with moves by both the Howard and Rudd governments to boost access to and the size of the pension.

The report finds “a high level of anxiety” among Australians aged 30 to 44 who “see their children being disengaged with superannuation and also see their parents deferring retirement or reverting to pensions due to superannuation losses”.

“There is a sense of guilt about superannuation among this group,” the report says.

“They know they should understand superannuation and be more active in managing it, but they make myriad excuses for why they will do it later.”

Releasing the research, assistant treasurer, Bill Shorten, said it provided support for the Government’s plan to lift compulsory super contributions from 9 to 12%.

But while consumers do say 9% will not be enough, the overwhelming impression is one of ignorance about what is enough.

The Henry tax review found against lifting compulsory contributions, reporting this would put pressure on the pre-retirement incomes of low and middle-income earners.

Labor announced plans to legislate for higher super contributions on the same day as it unveiled the Henry recommendations.