Finance Your Super Why people struggle with superannuation

Why people struggle with superannuation

The super system creates anxiety. Photo: Getty
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Superannuation funds need to find psychologically smart ways to engage with their members who often find super so complex they just don’t know where to start understanding it, a new report from consumer advocacy group CHOICE has shown.

That difficulty of comprehension triggers a range of psychological states that compound the situation making dealing with the issue even more difficult.

When confronted with super issues, people become “quickly agitated” and put the issue on the back burner rather than dealing with it.

There is a lack of confidence about the industry, with many people seeing super funds as “biased and self-serving, putting their own interests ahead of members”, the report said.

Market volatility exacerbates a sense of loss of control, creating feelings of a systemic injustice at work that “undermines individual action rather than facilitates it”.

“More education in this area is not the answer. To engage, the opportunity here is to provide answers and a short cut to decisions,” the report said.

Dr Carsten Murawski, researcher at the University of Melbourne, told The New Daily that too much choice had been shown to be a problem by US research.

“With 401K (retirement) plans, more investment options made people less likely to make active choices and resulted in them holding less risk in their portfolio than was optimal from an investment viewpoint.”

To improve the situation, funds need to understand the psychology of members and engage with them in smart ways, tailored to their particular demographic.

The survey looked at three discrete groups: young adults, new mothers and pre-retirees.

Young adults

Young adults typically live in the moment, concerned with their immediate needs, which often leaves superannuation well over their horizons. They tend to hold attitudes that the future will look after itself and planning is not important.

“You can’t access it until you’re like 60 or something so it’s not something I think about really. There’s a lot more other stuff in my life that’s more important right now”

This statement from one young adult interviewed for the survey reflects a reality on one level. But it highlights a lack of engagement that leads young people to make poor decisions like maintaining a number of super funds from different employees which results in high fees.

Messaging like the following aimed at young people could address this: “Having more than one super account means you could be losing thousands to the super companies (that’s equivalent to your yearly Netflix and Spotify subscriptions combined, or a trip to Bali),” the report said.

New mothers

Pregnancy and its resulting imminent family obligations brings the future into sharp focus. Budgeting goes into overdrive and the common behaviour is to account for every dollar and save as much as possible.

The survey found that this was an ideal time to convince women that putting some money into super before they took maternity leave was a good idea.

Super health check.
Check the health of your super fund. Photo: Getty

A message that could work in encouraging young mums to focus on super contributions before the chaos of early motherhood takes hold could be “our super can still grow while you work on growing a family”, the report said.


These are people in the lead-up to retirement from the age of 45. The younger cohort, between 45 and 55, has kids at home and see themselves as  ‘middle aged’ rather than ‘old’ and with plenty of time before retirement.

The older group, 55 to 65, “are somewhat resigned or accepting of their lot in life. They have no plans for retirement and tend to think that their fate is in the hands of something bigger”.

A message for the younger group should be “your home plus a healthy super means you have two legs to stand on”, the report said. “Take regular small steps, from now on.”

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