The dissatisfaction appears rooted in concerns about the complexity of retirement products, coupled with inadequate guidance and insights on options. Notably, 19 per cent of those surveyed felt confused by the intricate nature of these products, while anxiousness over performance, potential benefits, and costs were also prominent issues.
According to Irene Guiamatsia, head of research at Investment Trends, the solution begins with elevating awareness among those approaching retirement about the income options their super funds offer. She highlighted, “Over half of those nearing retirement were unsure about their current options, although this does represent progress from 75 per cent just two years prior,” referencing remarks made at a recent media gathering in Sydney.
Fee structures in retirement products are seen as a top consideration for nearly 75 per cent of potential retirees today, a sharp increase from 45 per cent two years ago. Yet, securing a steady income throughout life and retaining access to funds are the primary considerations for 67 per cent and 63 per cent of those surveyed, respectively.
Externally, super funds face mounting pressure to enhance their retirement income strategies in response to policy expectations such as the Retirement Income Covenant. The government and regulators are closely scrutinizing these funds for improvements, as noted by ASIC Commissioner Simone Constant at the Conexus Retirement Conference.
The Investment Trends report underscores that retirement confidence finds itself at a ten-year low, with only 29 per cent of individuals close to retirement feeling prepared, down from 41 per cent the previous year. An alarming 62 per cent of pre-retirees foresee a gap between their retirement funding and needs—a divide that's grown to a 31 per cent shortfall in meeting a desired $4200 monthly income against expected revenues.
Another persistent issue is that half of superannuation members remain unaware of financial advice services provided by their funds, and two-thirds do not know if they offer pension products. Furthermore, a striking four out of five express unmet needs for advice on planning retirement, augmenting superannuation, and enhancing investment tactics.
Commenting on the findings, Jennifer McSpadden, Brighter Super’s head of retirement, emphasized the imperative for funds to “intensify their focus” on serving this corner of their membership. “There remains a vast knowledge gap among members with super funds positioned to create accessible retirement products that favor their welfare,” she stated. The research reiterates the significant link between accessible financial advice and positive retirement outcomes.
These insights drawn from Investment Trends shed light on persisting challenges and growth opportunities within the superannuation sector, and highlight areas for strategic focus to foster greater security for future retirees.
