Superannuation hit by housing and other living cost concerns

Superannuation balances were damaged during the pandemic, and a new threat is keeping people from examining their life savings.

Superannuation checks by Australians are slipping through the cracks as surging living costs prompt people take their eyes off long-term wealth.

New research by the nation’s third-largest superannuation fund, Aware Super, has found that just 14 per cent of Australians – less than one in seven – check their super yearly.

It found Covid has impacted people’s planning, and super fund members are being urged to spend five minutes examining their super when annual statements land in letterboxes and email inboxes soon.

More than 2.5 million nest eggs took a beating during the pandemic after the Morrison Government allowed people to withdraw up to $20,000 from their super to cover living cost shortfalls, and the current focus on rising interest rates and rents pushes super into the background.

Aware Super head of advice Peter Hogg said its research found only 8 per cent of consumers were planning to make voluntary contributions to build their super, “which is a bit of a worry”.

“After two years of market volatility with interest rate rises and cost of living pressures, people are just generally more nervous about finances, and they’re focusing on the present more than the future,” he said.

“Super can feel quite disconnected to the present.”

Aware Super’s research found that more than two-thirds of Australians checked their mortgage and savings accounts monthly, and 45 per cent weekly.

Nest eggs were cracked during Covid, and now home loans and rents are hurting them. Picture: iStock

“With interest rates going up, people are shopping around and looking for the best mortgage rate, whereas super is so far away in people’s minds that it’s hard to get engaged with it,” Mr Hogg said.

Goldsborough Financial Services director Brenton Miegel said people’s relative lack of interest in super stemmed from it not being as tangible as daily living costs.

“You know your super fund is there and it is growing, but the cost to you – unlike a mortgage – doesn’t immediately impact your situation,” he said.

Mr Miegel said he had not seen evidence of clients reducing their salary sacrifice contributions into super. “But that’s not to say it’s not happening or not being thought about, because cash flow is being squeezed,” he said.

It was a good idea for people to check their super account twice yearly, Mr Miegel said.

“When you get your statement, take five minutes to open it and have a look at what’s going on,” he said.

“Make sure your employer has been contributing the amounts they say they have been contributing, and check your insurance.”

A new guide by Aware Super suggests people check they are getting regular updates from their fund, download their fund’s app, contact a superannuation adviser, learn more about super through seminars, and examine ways to top up their nest egg.

The research found more than one-third of Baby Boomers, aged 55 to 69, are not confident about having enough money for retirement.

“We know there are high debt levels in this country, and with higher interest rates and cost of living, whether you are 25 or 55 that creates uncertainty – you don’t know what costs will be in the future, and how you are going to navigate that,” Mr Hogg said.

Some people found engaging with super overwhelming, he said.

“Though they might not feel confident, there’s probably things they can be doing – they could actually be on track but they need to engage with and understand it more.

Originally published as Superannuation hit by housing and other living cost concerns