COVID drives super contributions

superannuation voluntary contributions

Voluntary superannuation contributions have increased as a result of the COVID-19 pandemic as superannuants’ engagement with their savings reaches a two year high.

Superannuation funds members are now more likely to make voluntary super contributions than prior to the COVID-19 pandemic and at higher levels as well, according to analysis conducted by AMP.

The company said an examination of its superannuation members, which number close to one million, found they were 27 per cent more likely to make a voluntary contribution compared to the years before the coronavirus pandemic hit, and these contributions were 28 per cent larger.

AMP found superannuation fund members contributed an additional $296 into their funds over three months to September 2021 compared to the same period in 2019, and if this was continued would amount to an additional $75,000 in contributions over 40 years.

AMP head of technical strategy for superannuation John Perri said the report is indicative of the desire for people to reclaim some control over their finances.

“COVID has been a financial set-back for millions, particularly the financially vulnerable, with many withdrawing from their superannuation to access much needed funds,” he said.

“We know the sooner members engage with and understand the benefits of our world-class super system, the better chance they have of taking full advantage and improving their quality of life in later years.”

The AMP analysis also found individuals who accessed their superannuation early as a COVID-19 financial relief measure were 14 per cent more likely to make voluntary contributions compared to the pre-coronavirus era.

“What is pleasing is that following the initial COVID period we have now seen higher-levels of engagement with super and members that participated in the early release of super seeking to restore their balances,” Perri noted.

“Hopefully, as the circumstances for those who’ve withdrawn super improve, they’ll be more aware of the importance of rebuilding their super and the ways they can do this.”

Despite this optimistic development people who accessed their super early were still lagging the wider population by 15 per cent in terms of contribution rates, according to AMP.

Further positive signs have been witnessed toward closing the retirement savings gender gap with voluntary contribution rates among women who accessed their super early growing six per cent faster than men.

“It’s also encouraging to see more women making voluntary contributions and taking action with their super, and those working in retail, an industry hit hard by COVID,” he said.

The analysis also found an increase in engagement with superannuation with a four-fold increase in visits – at more than 840,000, to AMP’s online education content in the three months to September 2021, compared to the last three months of 2019, with many people research what level of super they should hold at their current age.

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