One-fifth of Aussies dropped or froze super contributions

The Australian Snapshot from State Street’s 2020 Global Retirement Reality Report has found 42 per cent of Australians experienced a deterioration in their financial situation since the COVID-19 outbreak. 

Two-thirds of Aussies (67 per cent) were impacted at work in some form, through reduced pay or lowered hours, a higher proportion compared to survey participants in the US, the UK and the Netherlands.

While a fifth stopped or reduced their retirement saving contributions, the majority of the Australian sample (67 per cent) said they have not made any changes to the amount they save into their retirement savings plans. 

In contrast, 7 per cent of the UK sample had made changes to their retirement saving contributions.

Whilst the majority expect the financial impact of the pandemic to be short-lived, a greater proportion of Australians compared to the rest of the world checked their super balance more regularly, switched to lower-risk investments and started drawing down early on their super.

The State Street report also noted a preference for low volatility over high returns. More than half (59 per cent) also voted in favour of investments with lower returns but with less chance of a loss, while 22 per cent said they’d prefer an option with relatively high expected returns, but with higher chances of a loss. 

Almost a third (31 per cent) of Australian consumers were also seen to be in favour of responsible investments. 

The majority of Australians felt that the impact of COVID-19 would have on their finances would most likely last a year or less. 

Around two-fifths (42 per cent) of Aussies said they are not optimistic about their retirement. 

But 38 per cent of the Aussie sample said the COVID-19 situation was having a high impact on their retirement confidence levels. 

Other areas impacting confidence were uncertainty around retirement plans and lack of trust in the system. 

The survey was based on a sample of 504 Australian consumers, among 3,479 respondents globally.