CEPAR research shows taking a mortgage triggers superannuation link-up

A NEW industry report by the ARC Centre of Excellence in Population Ageing Research (CEPAR), has found that, for many Australians, taking out a home loan is a trigger for increased engagement with superannuation.

The research project was conducted by researchers based at the University of New South Wales, the University of Sydney, University of Technology Sydney and Colonial First State (CFS). 

“We found that super fund members who took out a new residential mortgage in 2014 changed their super contribution behaviour around the time they took out their mortgage compared to those who did not take out a mortgage,” CEPAR deputy director and professor at the UNSW Business School, Hazel Bateman said. 

The way in which super contribution behaviour changed differed for members by the type of mortgage they took out.

“Those taking out a mortgage to buy an investment property tended to re-weight their portfolios towards real estate and away from their super but owner-occupiers tended to build up their super after the real estate purchase,” University of Sydney Business School professor Susan Thorp said.

The report also showed that super fund members who took mortgages also increased their interactions with their financial service providers.

“Members who took out a mortgage increased their number of bank branch visits, use of their bank app and online banking, as well as phone calls to their super fund,” Prof. Thorp said.

Superannuation is characterised by low levels of engagement as the way the system is set up allows many super fund members to ‘set and forget’ until retirement.

CFS national manager for analytics and business intelligence James Brownlow, said the results provided much needed insights into what triggers members’ engagement with their super.

“This research will help policymakers as well as super funds like CFS, more effectively engage members by shedding light on what triggers their engagement with super,” he said.

The New residential mortgages and superannuation engagement. CEPAR Industry Report 2019/2 was authored by Hazel Bateman, James Brownlow, Ben Culbert, Charles Chu, Christine Eckert, Bin Fu and Susan Thorp (2019). The industry report is available online at www.cepar.edu.au/publications/reports

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