Retirement wealth projections are changing the way superannuation fund members behave, the ARC Centre of Excellence in Population Ageing Research (CEPAR) says in a report. The report looked into how retirement income projections affected superannuation contributions, investment choices and member engagement.
Lead author, George Smyrnis, said that Australian workers rely on information from their superannuation funds regarding where they’re at in their retirement savings journey, and we like to focus on the present rather than the future. This means our expectations are off.
Superannuation funds are now making member estimates of retirement savings of projected wealth, or ‘retirement income estimates’. The research team wanted to understand how these estimates might affect behaviour of super fund members from a trial in 2013 by Cbus. Cbus sent about 20,000 members a retirement income estimate, and their current balance, for the first time.
Smyrnis says the impact on contributions, engagement and investment choices was ‘remarkable’.
The impact overview compared to those who were not given the estimate:
Additional savings were made (increase in motivation)
Engagement increased around advice, admin and processes-related interactions
Higher rates of salary sacrifice
Higher average amounts of salary sacrifice and voluntary contributions
Changes in investment options
George Smyrnis; Hazel Bateman; Isabella Dobrescu; Benjamin Newell; Susan Thorp (2019): The impact of projections on superannuation contributions, investment choices and engagement. CEPAR Industry Report 2019/1.