Retirement confidence weakens among fund members

New research has looked into the attitudes and behaviours of super fund members around retirement, saying many are concerningly disengaged and pessimistic about their financial future.

According to the latest CSBA FEAL Superannuation Experience & Engagement Benchmark, which surveyed 5,932 fund members from more than 100 superannuation funds, over half (57 per cent) of young members hold increasingly negative outlook about retirement.

Nearly a quarter of those under 55 years remain uncertain about their financial future.

Among their top concerns are a fear of running out of money (18 per cent), which climbs to 25 per cent for those aged under 35. Inflation and rising costs of living were also said by 17 per cent of members.

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Meanwhile, for retired fund members, inflation and rising cost of living were their top retirement concerns (24 per cent), followed by running out of money (16 per cent), and cost of health and aged care (14 per cent).

In terms of retirement confidence, the average score among all age cohorts stood at 6.3.

The weakest cohorts were those in the middle age and pre-retirement groups, with 35- to 44-year-olds at 5.9 out of 10.

Close behind were 45- to 54-year-olds at 5.8 out of 10.

The study also found significant differences between female (6.2) and male (6.6) fund members, along with those with default options (6.1) and custom investment mix (6.9).

“Attitudinal and behavioural insights are critical if trustees are to make inroads into targeted member engagement,” Sam Monteath, CSBA CX director of finance, said.

The study found the statement, ‘I am actively engaged with my super including investment mix, fees and insurance’, received the lowest score, with agreement at 3.3 out of 5.

Also, there was no indication that older members aged over 55 were more actively engaged.

Weighing in, Monteath observed room for improvement in empowering fund members, particularly off the back of a recent ASIC and APRA report on trustees that found alarming gaps in analysing, tracking, and integrating strategies to meet members’ income needs in retirement.

“Trustees must develop attitudinal and behavioural understanding at a granular level, to truly support members for the best possible retirement,” she said.

The survey also looked into the top three areas where fund members wanted to see improvement. These were better pre-retirement plans and personalised information and advice and better proactive communication.

They said that retirement planning seminars, handy modelling and projection tools, and clear guidance and advice were the most helpful services to prepare for retirement.

“These new insights reveal how much work opportunity exists to better engage with members and support them earlier on the retirement journey,” Monteath said.

Last month, the 2024 Challenger Retirement Happiness Index also identified a growing desire among fund members for education regarding financial options in retirement.

It found over two-thirds of Australians over 60 would be “much happier” if they didn’t have to worry about finances in retirement.

Among the more than 1,000 Australians surveyed, 72 per cent said that they would be much happier if they had a guaranteed income for life in retirement, with over four in 10 (42 per cent) strongly agreeing in this regard.

However, education regarding financial options in retirement also emerged as a key factor influencing contentment, with 77 per cent of respondents indicating that this would have a positive impact on their happiness.