A frightening number of Australia’s Generation Ys are in the dark when it comes to super and only half are able to correctly identify what superannuation actually is, a new survey from Rest Industry Super reveals.
The poll of 1,007 people, aged 18 to 30, showed seven out of 10 rarely or never think about their super.
Gen Y is usually defined as those born between 1980 and 2000.
Despite awareness campaigns, nearly one third of Gen Y are not aware of recent changes to the super system and nearly half said they are unsure whether there had been changes to the super guarantee percentage. Only one in four was able to correctly identify the amount of the current super guarantee.
These results show that it is time to go back to basics when it comes to engaging Gen Y with superannuation, said Rest CEO Damian Hill.
“Many education campaigns assume a level of knowledge when it comes to superannuation and financial literacy generally. This research shows us that for many young Australians, we need to go back to the ABCs of super if we are to effectively engage them.”
Hill is concerned the generation knows so little about their superannuation, despite the majority surveyed – 69% – saying they have one super fund and 19% saying they have two or more funds.
Twelve per cent did not know how many super funds they have.
Four out of 10 of those surveyed said they have doubts about Australia’s superannuation system.
“This lack of engagement with superannuation from Gen Y, with almost three quarters unaware of how much super they are getting, highlights how vital it is for government and the industry to continue their efforts to educate young Australians on the importance of retirement planning,” said Hill.
These findings are particularly concerning after the latest life expectancy rates shows Gen Y will be living longer – thus needing more retirement savings.
The latest figure released last week by the Australian Bureau of Statistics (ABS) projected ‘life expectancy at birth’ age for men of 79.9 and 84.3 for women.
But the Actuaries Institute allows for improvements in longevity and puts the figures even higher at 86 for men and 89 for women.
This means that 65-year-old males need to fund on average 21 years of retirement, and 65-year-old females will need to fund on average 24 years of retirement.
The risk of people outliving their retirement savings is greatly concerning, said Actuaries Institute president John Newman.
“Most people don’t realise how long they might live. Understandably many people base their retirement plans on the published life expectancies.
“However in reality, with rapid advances in medicine and the dramatic improvement in life expectancy, it is quite conceivable that in the coming years half of all healthy 65 year olds will live past 100.”