Super sentiment lags sharemarket performance

Satisfaction with super funds' investment performance has dropped from 47 per cent in September 2011 to 42 per cent in October 2012 despite a rebound in sharemarket performance, according to Mercer's latest Super Sentiment Index.

Mercer found 71 per cent of respondents now rated their knowledge of the connection between sharemarkets and superannuation as high.

It said the results from tracking the All Ordinaries Index against general sentiment towards superannuation showed an increase in positive sentiment towards superannuation was slow to follow an uptick in sharemarket performance.

Improved knowledge of sharemarket performance did equate with greater expectations of corresponding increases in super balances among 62 per cent of respondents, up from 48 per cent in September 2011.

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Mercer found people had increasingly positive perceptions of super as a way to save for retirement, with nearly half (49 per cent) saying superannuation was a very good/excellent way to save for retirement compared to 40 per cent in September 2011.

The results showed working Australians had more confidence that the long-term objectives of superannuation were worthwhile despite challenging short-term investment performance of funds, Mercer said.

Superannuation was expected to contribute 48 per cent to respondents' retirement resources, with dependence on government falling to an all-time low of 8 per cent.

Results showed greater levels of willingness to take ownership of the problem of retirement funding, particularly in light of increasing life expectancies, Mercer said.

But only 30 per cent of respondents felt they could fund a comfortable retirement.

Mercer found financial literacy rates were low — over 50 per cent of respondents did not know the access age for super, the concessional caps limit and the definition of an accumulation-style fund.

Less than one in four correctly answered seven or more out of 10 financial literacy questions correctly, while 19 per cent answered less than two out of 10 questions correctly.

Mercer said there was synergy between self-rating of knowledge and levels of financial literacy, with only 15 per cent of respondents rating their super knowledge as strong or sophisticated, down from 25 per cent in 2010.

Respondents also seemed in the dark on a number of upcoming legislative changes, with one in three being unaware of the super guarantee hike from 9 per cent to 12 per cent. Although advisers, followed by super funds, were respondents' main source of super advice, it said over half expected employers to do more to help employees manage their financial wellbeing and preparations.