Australia: Aviva calls for more financial education

Australians need financial education earlier in life to equip them to make better financial decisions at the beginning of their working lives, claims Aviva’s chief operating officer, Grant Salmon.

Research conducted by Aviva in the United Kingdom has reiterated the call for more financial education, with 94% of 40 to 50 year olds agreeing more needs to be done to educate people on financial matters. And, 64% of those believed that financial education is most important for young people aged between 16 and 18¹.

In Australia, the Federal Government has recognised this need and late last year launched the Consumer and Financial Literacy Taskforce, charged with developing plans to improve levels of consumer and financial literacy².

Many young Australians have still not heeded the call to think about superannuation. Right now, 25% of the population still have no superannuation, with 48% of that group aged between 15 and 24 years of age³.

According to findings from ANOP Research Services, people are beginning to realise their superannuation fund is wanting. In 2001, 63% of people surveyed believed their superannuation was adequate – in 2004 this number fell dramatically with only 45% of people believing this⁴.

"At Aviva we are constantly communicating the lack of superannuation savings – hopefully this message is starting to sink in. Everyone needs to think about boosting their superannuation with personal contributions, we simply cannot rely on the Government’s superannuation guarantee of 9%," said Grant Salmon.

In Aviva’s UK survey, 79% of respondents admitted they need to know more about money but 88% believed it was the individual’s responsibility to do something about it⁵.

Aviva’s Grant Salmon is concerned with this, stating the financial services industry and the Australian Government must play a role in the education process to ensure superannuation savings are adequate.

"The pension is not going to be enough for most people and it certainly won’t exist in its current form, so it’s definitely time everyone received this message loud and clear," said Grant.

According to the Australian Bureau of Statistics, people don’t make individual superannuation contributions because of complexity of financial products, being disinterested and being unable to afford extra payments⁶.

"Australians need to take an interest and find out all they need to know about their retirement income – an ‘I didn’t know’ attitude isn’t going to help them when they enter retirement with inadequate savings," he said.

Unfortunately the statistics highlight a huge super shortfall – a single person in retirement will need $32,000 a year for a comfortable retirement⁷. To do this they will need to have $520,000 in their superannuation fund⁸. Right now the average superannuation fund totals $21,000⁹.

"We can all see the huge shortfall and it’s time to take heed of this message. Every Australian employee has time to concentrate on their superannuation – they just need to ensure they ‘get educated’ about what they need for their individual circumstances," said Grant.

Anyone interested on building a robust retirement strategy should contact a financial adviser who can tailor individual superannuation and investment strategies for their individual needs.

-ends-

¹Aviva Plc, News Release, 94 per cent of 40 to 50 year olds say more financial education is needed, London, United Kingdom, November 2004.
²Minister for Review and the Assistant Treasurer, The Hon Helen Coonan, Helping Australians to spend wisely and save well, Canberra, June 2004. ³Australian Bureau of Statistics, Superannuation: coverage and financial characteristics, Survey of Employment arrangements and superannuation, June 2000.
⁴ANOP Research Services, Attitudes to Super, savings and Retirement and Choice, Adelaide, November 2004.
⁵Aviva Plc, News Release, 94 per cent of 40 to 50 year olds say more financial education is needed, London, United Kingdom, November 2004.
⁶Australian Bureau of Statistics, Superannuation: coverage and financial characteristics, Survey of Employment arrangements and superannuation, June 2000.
⁷The Association of Superannuation Funds of Australia Limited, Retirement Living Standard detailed budget breakdowns, Comfortable lifestyle and modest lifestyle, February 2004, Sydney.
⁸Kelly, S, Forecasting wealth in an ageing Australia – an approach using dynamic microsimulation, National Centre for Social and Economic Modelling, Canberra, June 2003.
⁹Australian Bureau of Statistics, Superannuation: coverage and financial characteristics, Survey of Employment arrangements and superannuation, June 2000.

For further information please contact:
Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892
Mobile: 0407 966 632

Notes to editors:

• Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners is the Australian funds management arm of Aviva plc, is a sister company. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
• Globally, Aviva Australia is part of Aviva plc, the world’s fifth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
• Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide.
• The information in this document reflects Norwich Union Life Australia Limited's (NULAL) and NULIS Nominees (Australia) Limited's ('NULIS') understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. Applications to invest in a financial product issued by Aviva, or any of its related entities, must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances.