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<\/p>\nFinancial literacy around superannuation is poor for many lower-income people, who still question why they can\u2019t access their funds until retirement age.<\/p>\n
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Understanding the purpose of superannuation is difficult for many consumers who do not understand access is restricted until retirement as they view it as their savings, a financial literacy body has found.<\/p>\n
Ecstra Foundation chief executive Caroline Stewart said confusion about the nature of superannuation is common and is raised by school students who attend the organisation\u2019s financial literacy classes, as well as adults seeking financial help.<\/p>\n
\u201cStudents find it very difficult to get their head around the fact that it\u2019s taken out of their pay and they don\u2019t get it back until they are 65,\u201d Stewart said during a media briefing in Sydney yesterday.<\/p>\n
\u201cWe can talk about compounding savings, but even your average adult really isn\u2019t paying much attention to that and they also can\u2019t access their super.\u201d<\/p>\n
She added this lack of understanding was borne out during the COVID-19 pandemic when the government allowed access to up to $20,000 of superannuation.<\/p>\n
\u201cIn the discussion during COVID around people accessing their superannuation early, a lot of community organisations we work with said it was a huge issue because people saw that as free money, and particularly for people in lower earning categories, especially women, that money was never going back,\u201d she said.<\/p>\n
\u201cYou lose the tax advantage once it\u2019s taken out and people didn\u2019t really understand that, but did it because they had short-term needs they needed to address and saw super as their money.<\/p>\n
\u201cWe work with a lot of financial counselling organisations and community legal centres and this is the tension in teaching people financial literacy.<\/p>\n
\u201cPeople with lower access to funds are quite often great budgeters because they know where every cent goes, but there is no money left over.<\/p>\n
\u201cSo teaching someone how to budget is one thing, but if they don\u2019t have money to live on, superannuation is irrelevant to them.\u201d<\/p>\n
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February 1, 2024
\nJason Spits
\nsmsmagazine.com.au<\/p>\n
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