The role of financial education in a choice of fund superannuation system

The primary objectives of this thesis were to evaluate whether superannuation fund provided educational resources provide superannuation defined contribution fund members with the required information to assist them in making informed choices regarding their superannuation investment funds; and to determine the importance users place on this information for their overall superannuation investment decision making. It was also an objective to determine which educational resources were not being used by defined contribution fund members and why members failed to use them. The importance placed by defined contribution fund members on other nonsuperannuation fund financial education resources for superannuation decisions was also investigated. The study was motivated by the growing literature that suggests that individuals fail to conform to rational economic behaviour when it comes to saving for retirement. The literature shows that many individuals lack the capacity or willpower to adequately plan or execute a retirement savings plan. Individual behavioural traits such as inertia, procrastination and heuristics, lead to behaviour that was inconsistent with the economic retirement savings model (life-cycle model). It was found in the literature that workers exposed to financial education were more likely to save and have a better retirement savings plan. The review of the literature shows that the educational seminar, website, written communications and financial counselling were all effective educational resources that changed an individual’s retirement savings and investment behaviour. To address the research objectives, a web-based questionnaire survey was electronically mailed to a cross-section of university staff purposively chosen from 26 universities across Australia. Both academics and non-academics were represented in the sample. The survey yielded a response rate of 30.1 percent. The responses to the questionnaire indicated that a large majority of respondents considered the superannuation fund provided educational resources to be important for their superannuation financial decision making. It was shown that the superannuation fund written communications were the most used educational resource and that financial counselling was the least used. The respondents believed they were being informed on superannuation matters when they utilised the superannuation fund provided educational resources. A lack of time and a lack of motivation were factors that received most agreement from respondents as reasons for not utilising the superannuation fund educational resources. Friends and colleagues were also found to be an important information resource when it came to a respondent’s superannuation decision making. Statistical inferences drawn from the data indicated that certain demographic groups were less likely to utilise both the superannuation fund provided resources and other non–superannuation fund educational resources. Females, younger individuals, those with low superannuation balances or low knowledge of financial matters were the key groups identified as less likely to utilise the educational information offered to them by the superannuation fund and from other sources.