Millions of Australians nearing retirement age know little about superannuation and are confused by its basic terminology, a survey has found.
A Suncorp Life survey found that one in three people between 50 and 64 did not know the definition of the term transition to retirement.
Transition to retirement is when people aged 55 or older have reduced their working hours, topping up their part-time income with an income stream from their superannuation savings.
That’s according to the Australian Taxation Office definition.
While many respondents were confused by the phrase, some attempts at a definition included; “advice to retirees” and “transferring fees from one account to another”.
The survey also asked for a definition of commutation – the conversion of a pension or annuity entitlement into a lump sum.
Respondents said commutation could be a form of communism, going from place to place, or part of an electric motor.
Preserved benefit was confused as a regular return or, alternatively, what was left after the government took its cut.
The correct definition, Suncorp says, is a superannuation benefit that must be kept in a super fund until retirement.
Suncorp Life executive general manager David Carter said the survey showed the superannuation industry needed to more readily communicate in plain English with its customers.
“The superannuation industry needs to do more to demystify super by using plain English to clearly explain industry buzz-words,” Mr Carter said.
“While the survey responses may be humorous, financial literacy awareness is a serious issue and one that needs to be addressed.”
The Suncorp Life survey found that women were far more likely to be confused by industry jargon than men.
More than 42 per cent of women respondents had not heard of transition to retirement compared to 35 per cent of men.
Almost 60 per cent of woman had not heard the term non-concessional contribution compared to 47 per cent of men.
Source: Business Day