An OECD report has found Australian pension funds are among the worst performing in the world.
Statistics from the Australian Bureau of Statistics show household wealth has plummeted by 25 per cent.
And SuperRatings performance data confirms that: “It’s official Australian superannuation funds have experienced their worst financial year since compulsory superannuation was introduced in 1992.”
Most worrying are superannuation statistics from the Australian Prudential Regulation Authority that point to a gradual but substantial drop in voluntary contributions.
According to the data, member contributions nearly halved over a 12-month period. In March 2009, members contributed a total of $2.8 million compared with $4.4 million in March 2008.
With the financial crisis hitting people’s wealth and super returns, voluntary contributions look set to continue their fall.
And it could remain like that for at least the next three to five years, according to Australian Institute of Superannuation Trustees chief Fiona Reynolds.
Reynolds says confidence will need to return to superannuation and that will only happen when markets start to climb upwards.
Furthermore, she believes recent government budget initiatives to reduce tax incentives for super will also affect people’s desire to top up their balances.
The vast number of Australians may not have hundreds and thousands of dollars to put into super, but what has worked has been the co-contribution initiative targeting low and middle income earners.
Given the negative super returns and a volatile market, in what seems an audacious plan, REST Superannuation has again used June to push the government’s co-contribution initiative to its members.
Last year, more than 17,000 members contributed nearly $75 million into their super and while it is early days yet, REST chief Damian Hill aims to contact more members despite the financial crisis.
Maybe it just takes a small step. As Hill says, it’s easier to put in $20 rather than $1000 in one lump sum. And for many people, their super will be the only big asset the have long after a history of market highs and market lows.
