Super engagement: Your annual super statement
Written and accurate as at: Aug 13, 2018 Current Stats & Facts
Superannuation is a powerful investment vehicle that will help you accumulate wealth during your working life to support your lifestyle in retirement. Furthermore, it will be one of the biggest financial assets that you will ever own in your lifetime...in most instances, second only to your family home.
Although it rarely sits idle (i.e. via Superannuation Guarantee contributions and investment returns ticking along in the background year after year, compounding), its true potential is often not realised until you actively engage with it on a personal level.
What we mean by this is, spending the time:
1. Breaking down any mental barriers (i.e. misconceptions and mistruths), and finding a way to connect with superannuation in a meaningful and productive manner, and
2. Gaining an understanding and appreciation of the benefits and purpose of superannuation according to your own financial situation, goals and objectives, and
3. Implementing an appropriate plan to harness many of superannuation’s specifics (e.g. investments, insurances, contributions, tax treatment, beneficiaries etc.) for you, and
4. Reviewing your plan on an ongoing basis, and making adjustments where applicable, so that it continues to be aligned with your financial situation, goals and objectives now and into the future.
Despite above, for some of us, we often only engage with our superannuation upon receipt of our electronic or paper-based annual statement – and even then, this may be a passing glance before filing it away next to last year’s statement.
Super engagement
Recent research* sought to understand how superannuation fund members currently engage with superannuation, how they think and feel about it, and what would prompt them to become more engaged moving forward.
Importantly, the findings from the research have provided some useful insights. We have listed some of them below, which may be especially of interest if you are currently feeling a little unengaged with your superannuation:
- There was a clear distinction between Australians that were engaged with their superannuation and those that were unengaged. However, whilst there were common themes amongst those that were unengaged, there were also subtle differences between some of them as well. Consequently, the unengaged were categorised into three related, but separate groups. A car analogy was utilised to illustrate these findings.
|
Super Engagement (Car Analogy) |
||||
| Engagement | Engaged | Unengaged | ||
| Title | The Driver | The Passenger | The Backseat | The Boot |
| Tagline | Engaged & in control | Unengaged, but curious | Unengaged & happy | Unengaged & avoiding |
| Description |
Knows the direction they are travelling, and the destination they are headed towards. Engaged. |
Aware of the direction the car is going, interested in knowing more and even keen on learning how to drive. However, just not sure how to get in the driving seat. Aware of the direction. |
Happy to let someone else drive, no urgency to get in the front seat. They know the car is moving, but don’t have any interest in driving it. They don’t want to think about where they are going or how they will get there. Putting it off. |
Totally in the dark and want to stay there. No idea what is happening and have no interest in knowing. Doesn’t want to know. |
| Continuum | ← ← ← | ← ← ← | ← ← ← | ← ← ← |
| Common themes |
Have started to or do make voluntary contributions. |
Don’t make voluntary/additional contributions. Have multiple superannuation accounts. Haven’t consolidated multiple superannuation accounts. Unlikely to know their total superannuation balance. Not yet identified the amount needed to retire. |
||
^ Please note: Before rolling one superannuation balance into another, it’s important to understand that in some instances it may make sense to retain multiple superannuation accounts, for example, for personal insurance reasons.
- Of the Australians that were unengaged, there were various reasons that they gave for why this was the case. For example,
- Lack of knowledge of superannuation basics. For example, what is it, how does it work, and how does it affect me now and in the future.
- Superannuation can be complex and certainly over the last decade or so has undergone numerous changes, which has further added to its complexity. Despite this, it’s important to be aware of the main concepts of superannuation from contributing money during your working life to receiving an income stream in retirement. One way to help in this regard is by spending some time improving your financial literacy. To get started, please consider reading our Superannuation learning module, taking our corresponding Superannuation quiz, as well as looking through our annual superannuation statement jargon buster article.
- Superannuation isn’t an immediate priority. For example, there is more focus on today’s immediate priorities (e.g. paying bills, paying the mortgage etc.), rather than something ‘set in the future’ like superannuation.
- Whilst superannuation is something that will be used in the future (e.g. when you retire), the actions that you take now (and as you progress through life), will have long-term implications when you finally reach that point when you begin to use it, e.g. as an income stream in retirement. As such, it’s important to take the time to connect with, and be motivated to provide for, your future self – when it comes to retirement planning, the more you plan and the earlier you start, the better.
- Uncertainty and lack of trust around superannuation. For example, superannuation laws continuously changing, and volatility in investment markets.
- In terms of the superannuation laws, although as frustrating as it may be, it’s important to keep in mind that change is often an inevitable part of life. Despite the changes (recent or otherwise), superannuation remains a powerful investment structure for wealth accumulators and retirees alike.
- In terms of volatility, given the long-term investment timeframe for superannuation (both as a wealth accumulator and retiree), often the investments that you hold will be a diversified mix of capital growth assets (e.g. property and shares) and capital preservation assets (e.g. cash and fixed interest assets). As such, given investment cycles, there will be some volatility in your superannuation balance from time to time; however, this volatility will often be carefully managed through the application of diversification fundamentals.
- Lack of knowledge of superannuation basics. For example, what is it, how does it work, and how does it affect me now and in the future.
- In terms of what would prompt the unengaged to become more engaged moving forward, what was found was the need to change the ‘frames of reference’ of super. What is meant by this is directing audience-specific, response-eliciting key facts/messages to individuals so that meaningful and productive connections with superannuation can begin to occur. For example:
- Young adults
- ‘Having more than one super account means paying more than one set of fees’.
- ‘If you have multiple accounts, you’re probably paying for multiple sets of life insurance’.
- New mothers
- ‘Taking a career break to have a family can reduce your super balance by up to $50,000 by the time you reach retirement age’.
- Younger pre-retirees (late 40’s)
- ‘Your saving now will make a difference’.
- ‘It is not too late to do something about your super’.
- Older pre-retirees (55 plus).
- ‘A plan gives you choices. There is a plan for you’.
- ‘Retirement is a process’.
- Young adults
Importantly, whilst changing the frames of reference of superannuation predominantly resides with superannuation funds, regulatory bodies and the Government, the examples listed above may strike a tune and help spark something in those of us that are feeling a little unengaged right now – if that is the case then please reach out to us as we are here to help.
Moving forward
This article is not meant to be condescending to those of us that are unengaged. Rather it aims to be informative with regards to the fact that some of us do find it difficult to engage with superannuation for one reason or another.
It also serves to highlight that given the importance of superannuation, if you are currently feeling a little unengaged it’s vital to recognise why this is might be the case and seek to find a meaningful connection so that you release the true potential of superannuation for your own benefit now and into the future.
Importantly, we can help point you in the right direction with an appropriately designed roadmap aligned with your financial situation, goals and objectives, and provide you with a helping hand along the way, but at the end of the day the fate of your superannuation (and your personal financial empowerment) ultimately rests with you.
With this in mind, as a superannuation fund member, you’ll be receiving your annual superannuation statement soon (if not already) either electronically or through the mail. Take some time to review and connect with your statement and please contact us if you have any questions regarding your statement or how you are tracking towards your financial goals and objectives.
*Choice. (2016). Project Superpower.
