Younger members of superannuation funds are more likely to switch funds than more mature aged members under the new choice regime, according to Mercer Wealth Solutions’ Super Switch Index for the 2005 December quarter.
The survey, involving over 850 participants, revealed a greater number of employees under the age of 40 in the ‘at risk’ and ‘giving consideration’ categories that indicate a propensity to switch.
Furthermore, of those respondents aged 35 to 39 only one-third, or 32 per cent, considered themselves ‘unlikely to change’ from their current superannuation fund.
Mercer Wealth Solutions business leader David Anderson believes the results reflect the growing financial demands faced by people in their 30s. He feels this group becomes more aware of superannuation when they change jobs and are confronted with the process of potentially consolidating their super balances.
In direct contrast to the mood of younger super fund members, 57 per cent of those participants over the age of 55 said they were ‘unlikely to change’ from the fund to which they already belonged.
“Based on our analysis, those aged 55 and over appear far less likely to switch. This could be due to their proximity to retirement and the perceived cost and effort involved in changing,” Anderson said.
He believes the survey findings reflect the differing needs of super fund members and shows funds will have to be mindful to tailor the services on offer to suit all of their members’ needs.
Overall the study showed the number of people contemplating a switch of fund had significantly fallen, with 49 per cent of respondents indicating they were ‘unlikely to change’ funds now, in comparison to 34 per cent when the same survey was conducted for the June 2005 quarter.
At the same time the number of participants who fell into the ‘at risk’ category halved from 16 per cent in June to 8 per cent in December.
Anderson said the results confirmed the effect of choice would only become evident over the long term.
“It looks as though choice could be a ‘slow burn’ issue. Its impact may be felt over the next few years, rather than the next few months,” he said.
