COVID-19 has impacted almost every aspect of people’s lives globally. Whilst the short-term financial implications of the pandemic are front of mind for many individuals, we were interested to see whether these worries changed long-term savings behaviour. In this year’s Global Retirement Reality Report (GR3), we investigate the impact that COVID-19 has had on personal finances and behaviour around retirement planning. In this overview, we share the results of our survey of Australian pension savers, interviewed in early May.
Of the Australian savers in our survey, 42% said they have been negatively impacted financially by COVID-19. The crisis has seen an impact on jobs and wages through such areas as reduced pay or reduced hours in a much higher proportion compared with the United States, the United Kingdom and the Netherlands.
Although not a direct result of COVID-19, we continue to see a lack of retirement confidence in Australia. The crisis has only exacerbated long-standing issues around lack of savings and uncertainty of retirement outcomes.
Whilst the majority expect the financial impact of the pandemic to be short-lived, Australians are already reacting with respect to their retirement savings. Compared with the rest of the world, a greater proportion of Australians during the crisis:
Checked their superannuation balance more regularly
Switched to lower-risk investments
Started drawing down early on their superannuation assets
Australians surveyed also showed an appreciation for lower volatility strategies and companies that were managed responsibly with regard to the crisis. These findings provide useful insight into the kinds of funds members would like to see their savings invested in.
Key Finding #1: 42% of savers have experienced a deterioration in their financial situation since the COVID-19 outbreak
We began by taking a pulse check on the current financial situations of individuals, compared with the period before the COVID-19 outbreak. We found that 67% of Australians in our survey had been impacted at work in some form, such as having reduced pay or reduced hours, a higher proportion compared with survey participants in the US, the UK and the Netherlands.