Only 56 per cent of retirees feel satisfied with the retirement income options provided by super funds, according to research from Investment Trends.
The researcher’s 2024 Retirement Income Report, done in conjunction with Brighter Super, found dissatisfaction around retirement products revolved around several concerns over complexity and insufficient guidance.
Some 19 per cent were concerned about the complexity of retirement products; the insufficient information or guidance, concerns about the product’s performance, uncertainty about benefits, and concerns about the cost ranking nearly as high.
Investment Trends head of research Irene Guiamatsia said pre-retirees needed to have better awareness about the retirement income product options available through their super fund.
61 per cent of pre-retirees said they were “actually not sure what options this super fund has”, but this number is a significant decrease compared to two years ago.
“What is pleasing to see is that 61 per cent used to be 75 per cent, so things are going in the right direction, but it’s still more work ahead when it comes to product features,” Guiamatsia said at a media briefing in Sydney.
When it comes to consideration for investing in retirement income products, around three-quarters said fees were the primary concern – something cited by only 45 per cent of respondents just two years ago.
But 67 per cent cited income lasting for life, and 63 per cent cited the ability to access funds during the life of the product as important product features.
Pressure points
Super funds are under pressure to deliver better retirement income strategies for members due to the Retirement Income Covenant and have been put on notice by the government and regulators to improve.
ASIC Commissioner Simone Constant went as far as telling super funds at the Conexus Retirement Conference* their trustee boards should have retirement leadership experience.
The Investment Trends research found retirement confidence has dropped to a 10-year low with 47 per cent of pre-retirees feeling unprepared for retirement as cost-of-living pressure mounts.
Only 29 per cent of pre-retirees feel they are prepared for retirement in 2024, compared with 41 per cent in 2023.
The proportion of pre-retirees anticipating a retirement funding gap has reached a five year high of 62 per cent. They are expecting an income of $2900 a month but anticipate needing $4200 for a comfortable retirement – a 31 per cent gap.
The research also noted that half of all super fund members are unaware their main super fund offers financial advice, and that two-thirds of pre-retirees are not sure whether their super fund offers pension products.
Additionally, four out of five pre-retirees report advice gaps on retirement planning, growing their superannuation and investment strategies.
Brighter Super head of retirement Jennifer McSpadden said there were opportunities for funds “to zero in on this part of their audience, or membership”.
Super funds are the go-to source for retirement information and yet there remains “a significant knowledge gap for members”, she added.
“The report shows that there is a unique role for super funds to develop an easy way to understand and use retirement product that delivers better retirement outcomes for members,” McSpadden said.
“It also reinforces the direct link between receiving financial advice and securing a better retirement outcome.”
*Retirement Conference is a joint initiative of Professional Planner publisher Conexus Financial and The Conexus Institute.
